Dollar Pulls Back After U.S.-U.K. Trade Deal Boost, ING Says More Agreements Needed

Dollar Pulls Back After U.S.-U.K. Trade Deal Boost, ING Says More Agreements Needed

The U.S. dollar gave up overnight gains on Monday after rising on the back of a newly signed U.S.-U.K. trade agreement, as markets turned cautious amid a lack of further trade developments. The DXY dollar index slipped 0.3% to 100.383, after climbing to 100.862 during Asian trading.

According to Francesco Pesole, foreign exchange strategist at ING, the dollar's momentum is heavily reliant on ongoing positive headlines related to trade negotiations. “U.S. trade news continues to be the dollar’s biggest inspiration, and support of dollar upside momentum requires a never-ending supply of good headlines,” Pesole wrote in a research note.

He added that additional agreements with priority partners such as China or Europe would likely be necessary to push the dollar higher again. Without such developments, the greenback may struggle to maintain upward momentum in the short term.

The market reaction reflects a growing sensitivity to the geopolitical landscape, particularly as investors weigh how much support one-off trade deals can provide without broader, sustained progress.