USD: Tariffs are creeping back – ING
|The dollar began the week under pressure, despite the absence of a clear catalyst. Long-dated Treasury yields, which have once again regained a positive correlation with the dollar, continued to decline, but not at a faster pace than EU bond yields, ING's FX analyst Francesco Pesole notes.
Developments on the tariff front may weigh on DXY
"The recent strength in EUR/USD since the weekend appears less driven by rate differentials and more by lower yields signalling a defensive reallocation in response to growing concerns over a no-trade-deal outcome ahead of the 1 August deadline. The dollar’s weakness suggests its safe-haven status has not been restored, with markets maintaining a preference for European currencies in the context of tariff-related uncertainty."
"The US data calendar is quite light. Yesterday’s leading index for June declined by 0.3% in line with expectations, and today we’ll see two manufacturing indicators from the Philadelphia and Richmond Fed. The market impact should be limited."
"There is a case for the FX market to start responding more actively to tariff-related headlines. The defiant approach seen in the past few weeks may start to weaken with just over a week until the 1 August deadline. While we still like the chances of a USD rebound from here thanks to hawkish Fed repricing, negative developments on the tariff front could adversely impact the DXY."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.