Trade and Tariff Concerns Weigh on the USD – Scotiabank

June Kicks Off with Renewed USD Weakness Amid Tariff Headlines

The US Dollar (USD) is back under pressure as June trading begins, unwinding late-May gains that Scotiabank attributes largely to month-end flows. With President Trump's decision to double tariffs on steel and aluminum imports to 50%—and China responding in kind—the Greenback faces renewed downside pressure amid market unease.

US Assets Struggle as Risk Sentiment Sours

Scotiabank notes that the USD's decline is accompanied by weaker equity futures and underperforming US Treasury yields, pointing to a broad-based risk-off move. Investor concerns are centered around:

Trade friction between the US and China
Potential blowback on economic growth
Inflationary pressures from tariffs
Perceived threats to Federal Reserve independence

Markets seem to be drifting back to the trade-driven caution that dominated April and May.

DXY Technical Outlook Signals Deeper Correction

The US Dollar Index (DXY) is struggling to maintain support above the May 23rd low (99.7), with Scotiabank warning of a possible retest of the April low (97.9). If trade tensions persist and Fed credibility wanes, DXY could slip further into the 90.00–95.00 range in the coming months.