USD pairs face pressure as Bessent threatens August tariff hikes

The US dollar is experiencing selling pressure across major pairs following Treasury Secretary Scott Bessent's warning that tariffs will increase to April 2 levels if trade agreements aren't reached by August 1. USD/JPY has declined 0.4% to 155.20, while EUR/USD gained 0.3% to 1.0825 as traders price in potential economic headwinds from escalating trade tensions. The threatened tariff increases could impact US inflation dynamics and complicate the Federal Reserve's monetary policy path, potentially limiting further rate hikes. Market participants are reassessing dollar positions amid concerns that heightened trade barriers could slow economic growth and reduce foreign investment flows. Technical indicators show USD/JPY testing support at 155.00, with further declines possible toward 154.50. EUR/USD faces resistance at 1.0850, though sustained trade uncertainty could push the pair higher. Traders should monitor upcoming trade negotiations closely as outcomes will significantly influence dollar trajectories through Q3 2025.