US Dollar Index falls to near 97.50 as White House policy doubts linger - fx

US Dollar Index falls to near 97.50 as White House policy doubts linger - fx

US Dollar Index Falls to Near 97.50 as White House Policy Uncertainty Persists

The US Dollar Index (DXY), which tracks the greenback against six major currencies, fell to approximately 97.50 in Asian trading hours on Thursday, extending its decline for the second consecutive session. The weakening reflects growing uncertainty surrounding US trade policy and mixed economic signals, which have dampened investor confidence.

Recent developments have intensified ambiguity about the trajectory of US tariffs. Following the Supreme Court's invalidation of President Donald Trump's emergency tariff authority under the International Emergency Economic Powers Act (IEEPA), Trump announced plans to impose a new 10% global tariff under Section 122 of the 1974 Trade Act. While he had previously threatened to raise this rate to 15%, no formal directive has been issued, leaving markets in limbo. The European Union has paused ratification of its trade agreement with the US until the administration clarifies its tariff strategy.

Economic data has further pressured the dollar. The US economy grew at an annualized 1.4% in Q4 2025, below expectations, while core PCE inflation rose to 3.0% year-over-year in December, underscoring persistent inflationary challenges. These figures complicate the Federal Reserve's policy outlook, as they suggest a delicate balance between addressing inflation and supporting growth. Fed officials have emphasized the need to maintain current interest rates amid a resilient labor market.

Geopolitical tensions, particularly escalating rhetoric between the US and Iran, have limited the dollar's downside by fueling risk-averse sentiment. President Trump's reported consideration of limited airstrikes on Iran, should diplomatic efforts fail, has added to market volatility.

The dollar's performance remains closely tied to clarity on trade policy and inflation dynamics. While near-term weakness persists, broader uncertainties may constrain further declines. Investors will likely monitor upcoming economic releases and Fed communications for directional cues.

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