FX.co ★ DXY Extends Pullback

On Tuesday, the dollar index dipped below 97.7, continuing its retreat from the four-week peak of 99, experienced on July 17th. This movement comes amid ongoing evaluations by markets of recent changes in US trade policy and their potential impact on Federal Reserve rate decisions. Treasury Secretary Bessent emphasized that the administration is focusing on securing high-quality trade agreements, rather than the quantity expected in the near term. This approach might open the door for significant tariffs to be implemented at the beginning of August. Insights from certain Federal Reserve officials and the latest minutes of the Federal Open Market Committee (FOMC) revealed that several members consider tariffs to be inflationary, which may lead the central bank to postpone further rate cuts. Easing some concerns, Bessent also mentioned that the current tariff agreement with China is likely to be extended next week, before its expiration on August 12th. Among the key currency pairs in the index, the yen strengthened as it appears Japan's Prime Minister Ishiba will maintain his position, thus averting possible political instability.