US Dollar Weakens Amid Trade Tensions and Inflation Concerns
US Dollar Weakens Amid Trade Tensions and Inflation Concerns
The US dollar faced downward pressure on Monday due to escalating trade tensions and persistent inflationary concerns. Recent statements from President Trump indicated the potential imposition of a 25% tariff on all steel and aluminum imports, a move that has unsettled global markets. This announcement has led to increased demand for safe-haven assets, with gold prices climbing above $2,940 per ounce, approaching the significant $3,000 threshold.
The proposed tariffs are set to take effect on March 12 and will encompass imports from all countries, including key trading partners such as Mexico and Canada. However, there is a possibility of exemptions for certain nations, notably Australia. In response to these developments, the US dollar has experienced a decline against major currencies, as investors weigh the potential economic repercussions of a full-scale trade war.
Concurrently, the Federal Reserve is poised to release key inflation data this week. Market participants are particularly attentive to the core Consumer Price Index (CPI), which is anticipated to rise by 0.3% for the month, translating to an annual increase of 3.1%. Should the inflation figures surpass expectations, it could prompt the Federal Reserve to reconsider its current monetary policy stance, potentially leading to adjustments in interest rates. Such a scenario would have profound implications for the US dollar’s trajectory in the forex markets.
