USD consolidation extends as risk appetite improves – Scotiabank

The US Dollar (USD) continues to consolidate in calmer ranges. US President Donald Trump suggested on Monday that further concessions might be possible for auto parts facing 25% tariffs, saying he was 'looking at something to help car companies', Scotiabank's Chief FX Strategist Shaun Osborne notes.

USD steady to slightly lower but retains a weak undertone

"No further details were offered but the comments follow the quick rollback of reciprocal tariffs last week and the late Friday 'pause' on electronics tariffs. Market volatility and the practical considerations around demands to reshore manufacturing quickly may be having a constraining effect on the broader roll out of tariffs. Still, the president did promise tariffs on pharma were coming in the near future as the US launches investigations into drugs and semiconductor imports and China today ordered a halt to Boeing plane deliveries."

"Trade tensions remain elevated and uncertainty over the economic outlook persists but global stocks are firmer for now on hopes of more tariff concessions. Bonds are mostly lower. The USD is mixed on the day so far. The NZD, GBP and AUD and are leading (moderate) gains among G10 FX while the EUR and CHF are marginally lower. Sentiment and positioning have turned against the USD there appears to be ample room for the trend to develop still."

" The charts suggest the DXY is consolidating recent losses via a minor triangle on the intraday chart, possibly ahead of further losses. Trend momentum signals are aligned bearishly for the DXY across a range of timeframes, implying limited potential for the index to rally in the short run at least, and ongoing downside pressure on the market. Intraday support is 99.40, resistance is 99.90. Loss of support around the 99 area would suggest more technically driven weakness in the medium term for the index."