Dollar Dips Amid Trade Speculation: A Closer Look

The U.S. dollar declined to a one-week low amid speculation about President-elect Trump's tariff policies. The greenback's movement is influenced by potential tariffs focused on national security and economic sectors. Trade dynamics with the euro zone and other currencies like yen and sterling also play a role.

The U.S. dollar remained near a one-week low against major currencies on Tuesday as traders speculated on the potential scale of tariffs promised by President-elect Donald Trump. While a Washington Post report suggested Trump's aides were considering applying tariffs only to certain critical sectors, Trump denied these claims via social media.

The dollar index, which measures the U.S. dollar against the euro, sterling, and other key currencies, slightly improved to 108.38 from a low of 107.74, following a recent high since November 2022. The movement reflects expectations about Trump's fiscal and regulatory strategies and their impact on U.S. growth.

Experts like Chris Weston of Pepperstone believe that Trump's proposed tariffs may not materialize in full, as suggested by the recent reports. The dollar's fluctuation also responds to currency movements in the euro zone and its ongoing tariff threats, as well as rising Treasury yields and global economic sentiment.

(With inputs from agencies.)