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Dollar Stalls as Markets Seek Direction on Tariffs

The U.S. dollar hovered near flat levels on Monday, with traders showing signs of hesitation amid ongoing uncertainty around U.S. and European Union trade policy. With no concrete update on potential tariffs, forex markets are cautiously awaiting clarity before committing to fresh positions.

According to a Yahoo Finance report, the dollar index was little changed as market participants weighed geopolitical risks and macroeconomic indicators. Investors have dialed back aggressive USD bets, reflecting a broader risk-off sentiment creeping into global markets.

The muted tone reflects how fragile current sentiment is—caught between inflation concerns, mixed earnings, and lack of policy clarity.

Tariff Uncertainty Overshadows Data

While recent U.S. data on employment and manufacturing has been largely in line with expectations, the bigger story continues to be tariff negotiations. As talks between Washington and Brussels remain inconclusive, traders are left speculating on how future import duties could impact trade flows and growth outlooks.

As reported by The Edge Malaysia, the dollar’s limited movement underscores a broader caution within currency markets, where sentiment remains sensitive to any trade policy shift. This is especially important as any renewed tariff escalation could dent both U.S. and EU economic momentum.

Meanwhile, the MSN article pointed out that the greenback’s hesitation is also being driven by diverging central bank tones, particularly with the Fed leaning dovish while the ECB remains slightly more hawkish.

What’s Next for the Greenback?

Traders are now turning their attention to upcoming remarks from U.S. trade representatives and central bank officials. Any clear signal regarding the tariff trajectory—or unexpected policy language from the Fed—could shake the dollar out of its current holding pattern.

Until then, analysts expect continued sideways movement in major currency pairs like EUR/USD and USD/JPY, as forex markets tread water in anticipation of policy clarity.

 

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