US Dollar Index (DXY) consolidates above 97.00 with tariffs weighing on sentiment

• The Dollar appreciates for the third day in a row but remains trapped within Tuesday’s trading range.
• Market sentiment has improved as investors digest the latest developments of Trump’s trade saga.
• Later today, the Fed minutes might provide additional guidance for US Dollar crosses.

The US Dollar Index, which measures the USD against a basket of currencies, is trimming previous gains as risk aversion eases somewhat during the early European session. The Greenback, nevertheless, maintains its broader positive tone from last week’s lows, with downside attempts limited at 97.00 for now.

US President Trump’s announcement of 50% tariffs on imports for copper products and the threat of imposing 200% levies on pharmaceuticals rattled markets on Thursday, but the market reaction was contained.

These measures came less than 24 hours after setting 25% tariffs on products from Japan and Korea, two of the three major Asian partners, and moving the deadline to August 1 in a decision that, according to the US president, is “firm, but not 100% firm.”

US Dollar’s recovery losses steam as risk aversion fades

The US Dollar appreciates for the third consecutive day, but remains trapped within Tuesday’s trading range, with US Treasury yields ticking lower for the first time in the last six days.

The market mood has brightened somewhat on the European session opening. The main stock indexes are posting gains, as the market becomes familiar with unexpected turns in the tariffs saga. The cautious mood, however, is keeping Dollar downside attempts limited so far.

The focus today is on the minutes of the last Federal Reserve meeting. Recent employment data has endorsed Chairman Powell’s hawkish stance. The risk for the US Dollar is skewed to the upside.