US Dollar Gains as Markets Brace for Tariff Shock Ahead of July 9 Deadline

US Dollar Recovers as Tariff Deadline Fuels Safe-Haven Demand

Markets Turn Defensive Ahead of July 9 Trade Deadline

The US Dollar (USD) kicked off the week on a strong bullish note, climbing higher as global risk appetite falters amid escalating tariff tensions. The US Dollar Index (DXY) surged to around 97.40, gaining 0.45% on the day, as investors flocked to the Greenback for safety.

With the July 9 deadline looming, when the United States is expected to send formal tariff notifications to over 100 countries, markets are becoming increasingly risk-averse.

Trump’s Tariff Threats Back in Focus

President Donald Trump confirmed on Sunday that 12 to 15 tariff letters will be sent beginning Monday. These letters are expected to impose non-negotiable tariff rates between 10% and 70%, depending on the recipient country's trade behavior.

The administration plans to implement these tariffs by August 1, and market participants are growing concerned about the global impact.

“Markets are responding with risk-off sentiment, lifting the USD amid fears of a global trade escalation,” analysts at TreduFX noted.

Technical Outlook: USD Bullish Momentum Rebuilding

From a technical standpoint:

• DXY reenters a falling wedge pattern, signaling potential bullish continuation.
• RSI and MACD indicators point to growing upside momentum.
• A break above 97.50 could pave the way to challenge the 98.00 zone.

Key Drivers Supporting the US Dollar:

• Safe-haven demand as trade tensions escalate.
• Less dovish Federal Reserve, following strong US labor market data.
• Rising US yields, attracting capital inflows.

Looking Ahead:

Investors will monitor:

• Additional tariff letter releases from the White House.
• Clarifications on implementation dates (July 9 vs. August 1).
• Reaction from major economies, especially the EU, China, and India.
• Upcoming Fed commentary for policy guidance.

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