The U.S. dollar declined during Tuesday’s trading session after posting strong gains in the previous session, as investors reassessed recent developments surrounding the trade negotiations led by the U.S. administration. The U.S. Dollar Index, which measures the currency’s performance against a basket of six major currencies, fell by 0.2% to 96.910, after reaching a peak of 97.280.
This decline came amid an announcement from the U.S. administration stating that letters had been sent to 14 countries including Japan and South Korea informing them of significant tariff increases on their exports to the United States. An executive order was also signed to extend the final deadline for reaching trade agreements from July 9 to August 1. However, it was noted that this date is not final and that the U.S. is open to considering alternative proposals from its trade partners.
Market analysts view these measures as a new development in the course of trade negotiations, though not definitive decisions. They expect the Dollar Index to remain within a range of 96.50 to 98.00, while awaiting the release of U.S. inflation data, which is seen as a key indicator for the direction of upcoming monetary policy.
Meanwhile, the euro rose by 0.5% against the dollar, supported by optimism about a possible trade agreement between the European Union and the United States especially since the EU was not included among the countries targeted by the new tariffs. A spokesperson noted that there was positive communication between both sides, with expectations that current tariffs would remain at 10%, and the possibility of special exemptions for specific sectors such as aviation and beverages.
In the same context, official data showed that German exports fell by 1.4% in May, which was worse than expected. Exports to the U.S. dropped by 7.7%, following a period of strong demand that preceded the potential tariff implementation.
The British pound rose by 0.3% against the dollar, benefiting from the UK’s pre existing trade agreements and the persistence of high inflation levels, which supports expectations of continued monetary tightening by the Bank of England.
In Asia, the Australian dollar climbed 0.7% against its U.S. counterpart after the Reserve Bank of Australia decided to keep interest rates unchanged, contrary to market expectations of a cut. The bank cited its desire to wait for clearer signs of inflation easing while also warning of global economic risks and the potential impact of the new tariffs.
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