US Dollar Partially Recovers After Delay on EU Tariffs

US Dollar Partially Recovers After Delay on EU Tariffs

The US Dollar Index (DXY) experienced a modest rebound on Monday, clawing back some of the losses it suffered during early Asian trading. This recovery comes after US President Donald Trump announced a delay in imposing the planned 50% tariffs on European Union (EU) imports, pushing the original June 1 deadline back to July 9. The extension has been welcomed by markets, easing immediate trade tensions and giving both sides additional time to negotiate a potential trade deal.

Early in the session, the Greenback had dropped as investors reacted to the prospect of tariff-related disruptions to global trade. However, the tariff reprieve helped restore risk appetite among traders, leading to a partial recovery. The US Dollar Index was trading near the 99.00 mark in European hours.

Despite the temporary relief, market participants remain cautious due to persistent underlying issues, notably the rising concerns over US fiscal health. President Trump’s tax reform plan is still pending a Senate vote and is expected to increase the US deficit significantly. This looming fiscal challenge could drive US Treasury yields higher, increasing borrowing costs and potentially putting upward pressure on the US Dollar in the longer term.

As the situation unfolds, investors are closely watching both the progress of US-EU trade talks and developments around US fiscal policy, which will continue to influence the Dollar’s direction in the near term.