US Dollar Weakens Amid Speculation of Delayed Tariff Implementation
The dollar index fell sharply in early US trading on Monday, dropping 1% in reaction to media reports indicating that the new US President may delay imposing new tariffs on his first day in office.
While tariffs were highlighted as a priority for immediate action under Trump’s administration, the current decision appears to signal a temporary delay rather than a complete change in strategy, injecting a measure of optimism into the markets.
Trade investigations into deficits and unfair practices remain a top priority for the administration, with tariffs likely to be used strategically as both incentive and deterrent until the desired outcomes are achieved. Although the US faces significant trade imbalances with the Eurozone and views China as a primary competitor, there is speculation that Trump may opt for a more diplomatic approach in this instance.
From a technical perspective, daily indicators have weakened, with the recent pullback breaking key supports and completing a Head and Shoulders pattern on the daily chart. Bears are currently testing the 108.00 support level (daily Kijun-sen) and targeting the next pivot at 107.60 (Fibo 23.6% of the 99.84/110.00 rally and former higher base). A break below this level would confirm a bearish signal, paving the way for deeper retracement toward 106.12 (the top of the rising daily Ichimoku cloud and Fibo 38.2%).
Despite the current pullback, broader bullish trends remain intact, with the decline potentially representing a healthy correction before another upward push. This outlook is bolstered by expectations that the President’s policies will largely align with his initial dollar-supportive stance, albeit with added flexibility in certain circumstances.
Res: 108.40; 109.00; 109.25; 110.00
Sup: 107.60; 106.97; 106.70; 106.12