US Dollar Index falls to near 97.50 as White House policy doubts linger

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, extends its losses for the second successive session and is trading around 97.50 during the Asian hours on Thursday.

The Greenback remains under pressure amid ongoing uncertainty over the White House’s economic policies. In his State of the Union address on Tuesday night, US President Donald Trump said the US economy is rebounding, defended tariffs as growth-supportive, and criticized the Supreme Court for striking down part of his tariff policy.

Trump increased the newly introduced Section 122 tariffs to 10%, despite earlier threats to raise them to 15%, after the Supreme Court struck down a series of country-specific tariffs enacted under IEEPA 10 months ago.

The US Dollar is also weighed down by remarks from International Monetary Fund Managing Director Kristalina Georgieva, which carried a cautiously dovish tone. Georgieva said US goods inflation has been partly driven by tariffs and suggested that reducing the federal funds rate toward 3.25%–3.50% would align with a return to full employment. However, she stressed that placing US public debt on a sustainable downward path will require firm fiscal action.

Still, the dollar’s downside may be limited as expectations for near-term monetary easing by the Federal Reserve (Fed) continue to diminish. Chicago Fed President Austan Goolsbee noted that inflation progress stalled last year, emphasizing that 3% inflation remains well above the Fed’s 2% target. Moreover, Boston Fed President Susan Collins added that maintaining current interest rates for some time is likely appropriate, citing a resilient labor market and persistent inflation pressures.