USD Strengthens as Trump Signals Tariff Changes, Fed Policy Shift

The US dollar index gained 0.2% following President-elect Trump's comments on potential tariff adjustments to combat inflation and his intention to prioritize immediate interest rate cuts when selecting the next Federal Reserve chair. Trump's policy signals suggest a more accommodative monetary stance ahead, which could initially weaken the dollar but may strengthen it if tariff policies effectively reduce import costs. His comments on Ukraine acknowledging Russia's stronger position and criticism of European handling added geopolitical uncertainty, supporting safe-haven dollar flows. The prospect of extended military operations in Latin America for anti-drug efforts could impact regional currencies, particularly the Mexican peso and Colombian peso. Technical indicators show USD index testing resistance at 106.50, with support at 105.80. Traders are positioning for increased volatility as Trump's policy framework becomes clearer, with particular focus on the intersection of tariff and monetary policy impacts on dollar strength.