U.S. Dollar Index struggles below 103.7 as traders weigh Trump tariff plans
The U.S. Dollar Index (DXY) price has extended its decline for a third consecutive trading day, retreating from a three-week high of 104.26 to a fresh 10-day low of 103.3. While the index staged a partial recovery in the European session, climbing to 103.6, it remains under pressure as traders assess the impact of upcoming U.S. trade policy developments.
Market participants are closely watching U.S. President Donald Trump’s planned announcement on reciprocal tariffs scheduled for Wednesday. Reports indicate that Trump has been urging his advisors to implement broader import duties, with discussions about a universal tariff covering most foreign goods.
According to the Washington Post, Trump has expressed regret for not imposing stricter trade policies during his first term and remains confident that higher tariffs will boost domestic manufacturing and generate significant government revenue. However, investors fear that these measures could dampen global economic growth and reignite inflationary pressures, weighing on the U.S. dollar’s strength.
U.S. Dollar price dynamics (March 2025). Source: Tradingview
RSI remains bearish, signaling weak upside momentum for the dollar
DXY’s recent recovery is facing resistance at 103.7, a level reinforced by the 50-period Exponential Moving Average (EMA) on the 4-hour chart. Additionally, the Relative Strength Index (RSI) remains in bearish territory, suggesting that upside momentum is weak. If the index fails to break above 103.7, the downtrend could resume, potentially leading to a decline below 103.3 and testing support near 102.8.
With technical indicators favoring further downside and policy uncertainty adding pressure, DXY remains vulnerable to another leg lower. On the other hand, a break above 103.7 resistance would be needed to shift sentiment in favor of a sustained recovery.
The dollar weakened as traders positioned ahead of the PCE Price Index. The decline paused at the 50-period EMA near 103.70, a key support level from the week's open.
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