The U.S. Dollar strengthened sharply on Tuesday as global markets reacted positively to news that the U.S. and China agreed to temporarily reduce tariffs—fueling a bullish trend in the Dollar Index and shifting momentum across major forex pairs.
The U.S. Dollar Index (DXY) rallied after Washington and Beijing agreed to reduce tariffs for a 90-day period—an encouraging signal for global trade. U.S. tariffs on Chinese goods will drop from 145% to 30%, while China will lower tariffs on American imports from 125% to 10%.
EUR/USD came under selling pressure as the market digested tariff news. The pair is hovering near the critical 1.1110 – 1.1130 support zone.
GBP/USD is losing ground as demand for the U.S. Dollar grows. If the pair closes below 1.3200, a drop toward 1.3000 – 1.3020 may be on the cards.
USD/CAD continues to climb as falling silver and oil prices weaken commodity-linked currencies. The pair is testing resistance near 1.4000.
USD/JPY rallied toward 148.00 on the back of rising Treasury yields. The 2-year yield neared 4.00%, and the 10-year approached 4.45%, supporting further upside in the pair.
The forex market is currently driven by optimism around U.S.–China trade negotiations and rising bond yields, providing strong tailwinds for the U.S. dollar. However, traders should watch for potential volatility ahead of key inflation data releases, which could influence the Fed’s rate stance and broader market sentiment.
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