The US dollar was relatively volatile on Monday as investors weighed the latest tariff measures and awaited key economic data.
At the same time, the dollar could continue to find support in changing expectations regarding the Federal Reserve’s monetary policy.
Markets increasingly anticipate the Fed to maintain rates unchanged, which could put a floor under the dollar.
At the same time, new US tariffs announcements could erode sentiment, exposing the US dollar to new pressures. President Trump announced a 30% tariff on imports from the European Union and Mexico, effective August 1, further heightening global trade tensions. As a result, traders could monitor the developments in talks ahead of the deadline.
Yields were relatively steady, with the 10-year Treasury near 4.42% as investors awaited this week’s inflation numbers. A hotter-than-expected CPI on Tuesday could revive speculation about a more hawkish Fed trajectory, potentially lifting yields further and limiting the dollar’s downside potential.
