USD strengthens as markets price in aggressive tariff policies

The US Dollar Index has gained momentum as traders reassess the potential impact of tariff policies on currency markets. EUR/USD faced selling pressure while GBP/USD retreated from recent highs, reflecting broad dollar strength. USD/JPY showed mixed signals despite the overall dollar bid. Market participants are increasingly factoring in the possibility of more aggressive trade measures, which could boost the greenback through safe-haven flows and potential inflationary pressures. The shift in sentiment comes as investors recalibrate expectations for Federal Reserve policy, considering how tariffs might influence inflation dynamics and growth prospects. Technical indicators suggest the dollar index is approaching key resistance levels, with a break above potentially triggering further gains. Currency pairs involving the dollar are showing increased volatility as traders position for various tariff scenarios and their economic implications.