U.S. Dollar Index pulls back to 103.85 as auto tariffs and weak GDP weigh on sentiment
U.S. Dollar Index pulls back from three-week high after tariff concerns.
The US Dollar Index (DXY) price has been bullish, reaching a three-week high of 104.25 before retracing 0.36% to 103.85 during the Asian session.
It recovered 0.14% of the losses in the European session, now trading near 103.98. The 50 and 100-hour EMAs continue to provide support, keeping the bullish structure intact.
The pullback followed concerns over slowing U.S. economic growth, linked to President Trump's newly announced 25% tariff on imported cars and light trucks. While a one-month reprieve was granted for auto parts, the tariffs have raised fears of dampened consumer demand and higher costs for automakers, pressuring sentiment around the dollar.
The temporary retracement suggests that traders are reassessing the strength of the bullish trend in light of the economic risks posed by the tariffs.
DXY price dynamics (March 2025). Source: TradingView.
U.S. Dollar rally pauses as traders await GDP and unemployment data
Market participants now turn to upcoming US economic data for further direction. The Final GDP quarter-over-quarter reading is expected to remain at 2.3%, and an upside surprise could reinforce confidence in the dollar. Additionally, unemployment claims, forecast at 225K (previously 223K), will be closely watched. A lower-than-expected figure could bolster the dollar’s recovery, while a higher print may weigh on sentiment.
Conversely, if economic data disappoints or tariff concerns escalate, DXY could face renewed selling pressure, challenging the 103.70 support level. Weak Pending Home Sales, which are forecast to rebound by 0.9% after a sharp 4.6% drop, could also add to downside risks if the recovery falls short. The index’s next move hinges on economic data releases and market reactions to trade policy developments.
DXY strengthened after the Services PMI rose to 54.3, reinforcing expectations of prolonged higher interest rates. However, the rally stalled at the 100-period EMA on the 4-hour chart.
