• The US dollar stands firm after falling to 97.18 during Asian negotiation hours.
• The president of the USA Trump sent letters to 14 countries on Monday, warning about new “reciprocal” tariffs, including Japan and South Korea.
• Persistent fiscal concerns and the expectations of interest rate cuts of the Fed continue to weigh on the long -term perspectives of the dollar.

The US dollar (USD) is at a point of dead on Tuesday, struggling to maintain the profits driven by Monday’s tariffs, while the feeling of the market is stabilized after an executive order of the president of the USA Donald Trump that extends the deadline of tariffs to August 1 from July 9.

The president of the USA Trump published commercial warning letters on his social media platform, Truth Social, late Monday, aimed at 14 countries, including Japan and South Korea. The letters warned about possible new “reciprocal” tariffs that would go into force on August 1. The news briefly promoted the demand of the US dollar as investors turned to safe refuge assets. However, with the deadline now delayed, markets expect that there are still time for negotiations, which has caused the US dollar index (DXY) to relax slightly on Tuesday.

The US dollar index (DXY), which measures the value of the dollar against a basket of six main currencies, remains firm during the European session after recovering previous losses from the Asian session. The index marked an intradic minimum of 97.18 before bouncing modestly, reflecting a cautious tone in the market while operators expect more developments in the front of tariffs. At the time of writing, the DXY is quoted around 97.47.

The delay has also revived family skepticism in the market, with some operators referring to the acronym “Taco” – ‘Trump is always thrown back’ – to describe the repeated pattern of hard speeches on tariffs followed by extensions of softer deadlines or actions. This has moderated the initial offer of safe refuge for the US dollar, since investors are committed to the extended deadline could lead to agreements instead of an immediate escalation.

Beyond short -term market movements, the US dollar remains under pressure due to persistent fiscal uncertainties, increased government debt and concerns about long -term economic stability. The growing US deficit has become a key concern for global investors, with debt levels that approach historical maximums. The public part of the US debt is close to 30 billion dollars, and it is projected that the federal deficit of 2025 will reach almost 2 billion dollars, which generates doubts about the sustainability of the country’s fiscal road.

At the same time, Trump’s criticisms to the Federal Reserve (Fed) and the growing expectations of interest rate cuts are adding pressure on the dollar. Fed futures of the FED at 30 days now discount 100 basic points of feature cuts in the next 12 months, according to CME Fedwatch, carrying the expected target range to the strip of 3.25%–3.50%.

Market movements: tariff conversations drive market feeling while the US extends the deadline

• The White House sent letters to 14 countries on Monday, warning them about new “reciprocal” tariffs that could go into force on August 1. Some countries were informed that their rates would increase slightly, Japan and Malaysia to 25% (from 24%). Other countries, such as South Korea (25%) and Indonesia (32%), will not see changes. Several countries received lower rates than before: Kazakhstan (25% from 27%), Tunisia (25% from 28%), Bosnia (30% from 35%), Bangladés and Serbia (35% from 37%), Cambodia (36% from 49%), Laos (40% from 48%) and Myanmar (40% from 44%). South Africa (30%) and Thailand (36%) will keep their current rates. The mixed signals indicate that the US is trying to exert pressure on its commercial partners while also leaves space for negotiations before the term of August 1.
• USA and the European Union (EU) are in active discussions to avoid new high tariffs, with both parties seeking to reach an agreement before the term of August 1. Reports suggest that the EU did not receive a formal warning letter on tariffs, which generates hope that Europe can receive lower exemptions or rates, possibly around 10%. The president of the EU Commission, Ursula von der Leyen, said she had a “good exchange” with President Trump, while US Treasury Secretary Scott Besent said that US is “about several agreements.” Conversations occur in the midst of concerns that Europe’s key exports could face tariffs of up to 50% if an agreement is not reached in time.
• Commercial conversations between the US and India advance as the tariff period extends until August 1. The United States has delayed planned tariffs of 26% on Indian exports until August 1, giving both parts more time to end a limited commercial agreement. The negotiations focus, as reported, on sectors such as textiles, leather and industrial goods, while more sensitive areas, including agriculture and dairy, remain unsolved. Indian officials are optimistic that a “mini-agreement” could be announced soon, with reports that suggest that an agreement could be reached as soon as Tuesday.
• Until now, only the United Kingdom, Vietnam and China have reached partial trade agreements. The United Kingdom secured a limited agreement in June to avoid high tariffs on steel and aluminum, although some details, such as quotas and rules of origin, are still under discussion. Vietnam agreed to a framework that includes free access to tariffs for US goods, while accepting a 20% tariff on its exports to the US and a 40% trans: 40% transford tariff to prevent the diversion of goods. With China, a basic framework was reached in June to reduce certain tariffs, including reduced tariffs on steel and electronics, along with expanded US access to Chinese rare earths. These three remain the only significant agreements before the term of August 1, underlining the difficulty facing the US to ensure broader agreements.
• The US dollar can continue under pressure in the coming months as protectionist commercial policies continue to weigh on the feeling. The highest US tariffs pose risks to economic growth while push up, complicating the Fed policy perspective. At the same time, the current trade war is leading to more countries to reevaluate its dependence on the US economy, which could accelerate the decrease in the role of the US dollar as the main reserve currency of the world. In addition, efforts to reduce the US trade deficit can reduce the global offer of dollars, limiting the need for foreign investors to recycle those funds in US assets and weaken the long -term demand for the dollar.

Technical analysis: DXY stabilizes within a descending wedge pattern as the impulse changes

The US dollar index (DXY) is showing recovery signs after breaking briefly below the lower limit of a descending wedge pattern last week. After the rupture, the index found about 96.50 and has been constantly rising, recovering ground above the lower wedge limit. On Tuesday, the DXY marked an intradic minimum of 97.18 during the Asian negotiation hours, but recovered during the European session, quoting around 97.47 at the time of writing, slightly above the exponential mobile (EMA) average of 9 days in 97.33. The return movement inside the wedge suggests that the break could have been a bassist trap, and the price action now hints a possible consolidation or a bull reversal if the impulse continues to accumulate.

Impulse indicators are beginning to show signs of stabilization. The relative force index (RSI) has risen to 42.57, even below the key level of 50 but pointing to the north, while the MACD histogram has just become slightly positive. The MACD line is trying to cross over the signal line, indicating that the bassist impulse could be fading and the bulls could take control.

The immediate support is observed in the minimum daily of 97.18, followed by the minimum of Monday at 96.89, which is closely aligned with the lower limit of the wedge pattern. On the positive side, a daily closure would be needed above the support converted into resistance of 97.70 to challenge the upper part of the wedge about 98.00, with a confirmed break by racing the way for a movement towards 99.00 in the short term.