US Dollar slides further as tariff tensions escalate

• DXY extends Monday’s losses, dropping below 106.00 amid trade tensions.
• Canada and China retaliate against US tariffs, increasing economic uncertainty.
• Technical indicators suggest a bearish crossover is forming, which may push the Greenback lower.

The US Dollar Index (DXY), which measures the Greenback's value against six major currencies, suffers another leg lower on Tuesday, adding to Monday’s losses and losing the key support of 106.00. Investors dumped the US Dollar after the US confirmed new tariffs on Canada, Mexico, and China with no last-minute extensions granted. As Canada and China announced countermeasures, further stoking market volatility.

Daily digest market movers: US Dollar tumbles amid tariff battle

• Canada retaliates with 25% tariffs on US goods worth C$30 billion with more to come in three weeks. In line, China pushes back on US tariffs, adding to global trade tensions.
• US Treasury Secretary Scott Bessent reassures that rates will come down and expects Chinese manufacturers to absorb tariffs.
• Locally, after a set of mixed data, concerns rise over stagflation as slowing growth and persistent inflation threaten the US economy.
• Regarding the Federal Reserve’s next steps, the CME FedWatch Tool indicates an increasing probability of a Fed rate cut later this year with investors growing confident of a cut in June.
• Equities trade mixed with uncertainty over tariffs weighing on market sentiment.

DXY technical outlook: Bearish crossover looms as downside pressure builds

The US Dollar Index continues to decline, slipping below both the 20-day and 100-day Simple Moving Averages (SMA), which are on the verge of forming a bearish crossover near 107.00. This pattern could signal further downside momentum for the US Dollar as Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators confirm growing selling pressure.

If the bearish crossover completes, it could open the door for further losses toward the 105.50-105.00 range in the short term. A recovery above 107.00 would be required to shift the near-term outlook back to neutral.