Markets were anticipating some more hawkish talk from new Federal Reserve Chairman Jerome Powell as he made his second appearance of the week. However, while he was still seen as endorsing rate rises, there was a bit more of a subdued tone. The dollar moved higher, but the fireworks were still yet to come.

The next major event of the day came as US President Trump announced a 25% tariff on steel and 10% tariff on aluminium.

This was a bit of a shock to markets and from that point onward we saw the US dollar decline. It also lead to selling in stocks.

The USD Falls Back Below Resistance

Resistance at 90.50 has been a big focus and overnight we had been pushing higher, even up to 91.00 on the DXY.

However, the political news didn’t help the dollars plight and we are now back below those two key levels.

If we drop back below 89.60, then we might very well be in for another test of the lows. That’s not out of the question. However, this month we will likely see our first rate hike out of the US, I wouldn’t be betting on too much downside from this point onwards.

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US Dollar Index (DXY)- 240 min Chart.