FX.co ★ US Dollar Holds Pullback

The dollar index fell below 98 on Tuesday, maintaining its retreat from the recent four-week high of 99 recorded on July 17th. This movement comes as markets continue to evaluate recent changes in U.S. trade policy and their potential effects on Federal Reserve rate decisions. Treasury Secretary Bessent emphasized a focus on the quality of trade agreements rather than their timing, suggesting that fewer agreements will be finalized in the next fortnight. This may lead to the implementation of aggressive tariffs at the beginning of August. Comments from certain Federal Reserve officials and the latest Federal Open Market Committee minutes highlighted that several members perceive tariffs as inflationary. As a result, the central bank might postpone further rate cuts. Among the major currencies in the index, the yen strengthened, with Japan's Prime Minister Ishiba expected to remain in power and prevent political instability. Additionally, the European Central Bank is anticipated to pause its series of rate cuts this week, which may reduce the rate gap with the Federal Reserve by the end of the third quarter.