USD weakness expected on Trump's credit card rate cap proposal impacts banks

USD faces potential downward pressure following President Trump's proposal for a 10% credit card APR cap, effective January 20, 2026. The announcement, part of populist affordability measures, lacks crucial enforcement details, creating uncertainty about implementation as voluntary or government-mandated. Financial sector stocks could face selling pressure, potentially weakening USD as banking profitability concerns mount. Major US banks derive significant revenue from credit card operations, with average APRs currently ranging 18-24%. The proposal's vague nature suggests limited immediate market impact, but traders should monitor DXY (Dollar Index) for weakness below 104.50 support. USD pairs may experience volatility as markets assess the proposal's feasibility and potential Congressional resistance. Near-term USD sentiment remains cautiously negative, with EURUSD eyeing 1.0950 resistance and USDJPY testing 155.00 support levels pending further policy clarification.