US Dollar Index Nears Multi-Week Highs Amid Global Trade Tensions

US Dollar Index Nears Multi-Week Highs Amid Global Trade Tensions

The US Dollar Index (DXY) continues its bullish momentum on Thursday, gaining 0.4% to trade near 98.44, a level not seen in three weeks. The Dollar’s strength is underpinned by risk-off market sentiment, with global investors seeking safe-haven assets amid increasing trade tension and uncertainty surrounding Federal Reserve leadership.

Risk Aversion Supports the Dollar

Amid rising concerns over new tariffs and retaliatory trade measures, markets have shifted away from riskier assets. This has contributed to the Greenback's resilience against major currencies, pushing the DXY higher for a second straight day.

Adding to the momentum, speculation is mounting that Fed Chair Jerome Powell may step down amid mounting political pressure, further unsettling global markets. However, in a classic risk-averse environment, such uncertainty is paradoxically supporting demand for the USD.

Key Economic Data Ahead

Investors are now focused on two critical US data releases due later today:

• Initial Jobless Claims
• Retail Sales (June)

These indicators will help investors assess whether rising tariff pressures are filtering into broader economic performance, especially consumer demand and labor market health.

Technical Outlook for DXY

The US Dollar Index has effectively erased Wednesday’s losses and is trading firmly near 98.44, just below its three-week peak of 98.50. A sustained move above this level could open the path to further gains, particularly if upcoming data surprises to the upside.

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