Dollar Weakens Amid US Tariff Concerns

7 Jan 2025 , 08:57 AM

As traders pondered if President-elect Donald Trump’s tariffs would be less forceful than promised, the U.S. dollar held close to a one-week low versus its rivals on Tuesday.

Following a Washington Post story that Trump’s advisors were considering measures that would impose tariffs only on industries deemed essential to U.S. national or economic security, the dollar fell against other currencies on Monday, including the euro and pound.

But after Trump refuted the allegation in a post on his Truth Social site, the currency gained some ground.

After falling as low as 107.74 overnight, its lowest level since December 30, the U.S. dollar index, which compares the currency to the euro, pound, and four other competitors, slightly increased to 108.38.

For the first time since November 2022, the index surged to 109.58 on January 2, mostly as a result of optimism that Trump’s planned fiscal stimulus, lower regulation, and higher tariffs would accelerate U.S. GDP.

Trump’s tax threats have specifically targeted the euro zone, and the euro was down a little at $1.03795 on Monday after reaching a one-week high of $1.0437.

After rising as high as $1.2550 in the previous session, sterling was likewise somewhat down at $1.125085.

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