USD weakens as India halts $3B defense deals amid tariff tensions

The US dollar faces additional pressure as India suspends plans to purchase approximately $3 billion in US defense equipment, including Boeing P-8I aircraft, Stryker vehicles, and Javelin missiles. India's defense minister has canceled his scheduled US visit, signaling deteriorating trade relations between the two nations. The pause comes as India awaits clarity on potential US tariffs and broader trade policy developments under the current administration. This geopolitical tension adds to existing dollar weakness, with USD/INR potentially vulnerable to further downside if trade disputes escalate. The development could impact broader USD pairs as markets reassess US trade relationships and their effect on dollar demand. Traders should monitor upcoming trade negotiations and any retaliatory measures from India, which could include diversifying away from dollar-denominated transactions or seeking alternative defense suppliers from Europe or Russia.