US Dollar climbs as markets react to Trump’s latest remarks on Ukraine and tariffs

The US Dollar Index (DXY), which measures the USD against six major currencies, edges higher on Wednesday, reclaiming the 107.00 level as traders weigh tariff and geopolitical developments. Overnight, US President Donald Trump reaffirmed a 25% tariff on car imports and expanded duties to include pharmaceuticals and semiconductors by April. He also blamed Ukraine for stalled peace talks between US and Russian officials, adding uncertainty to the negotiations.

Market attention now shifts to the Federal Open Market Committee (FOMC) Minutes from the Federal Reserve’s January meeting. A hawkish tone could boost US Treasury yields, reduce expectations for 2025 rate cuts, and strengthen the USD.

Market Movers: Key Developments

• Weekly Mortgage Applications declined 6.6%, signaling weaker housing demand.
• US Building Permits for January are projected to drop to 1.460 million from 1.482 million in December.
• Housing Starts are expected to slow to 1.4 million from 1.499 million.
• The Federal Reserve will release its January FOMC Minutes at 19:00 GMT, with any hawkish signals potentially supporting the USD.
• Global equities remain flat, with the Shanghai Shenzhen Index rising 0.7% despite Trump’s expanded tariffs.
• The CME FedWatch tool shows a 53.5% chance that rates will remain unchanged through June.
• The US 10-year Treasury yield hovers at 4.56%, its highest level this week.

Technical Outlook: DXY Holding Steady

The US Dollar Index remains largely unmoved by Trump’s tariff announcements, with only modest gains following stalled US-Russia negotiations. The 107.35 level now acts as firm resistance, while further upside targets the 55-day SMA at 107.93 and the 108.00 threshold.

On the downside, support is found at 106.52 (April 16 high), 106.51 (100-day SMA), and 105.89 (June resistance). With the RSI showing room for further downside, the 200-day SMA at 104.96 remains a possible target.