US Dollar Weakens as Stocks Rally on Tariff News

The dollar index fell by 0.43% following a Bloomberg report that President-elect Trump's economic team is considering a gradual approach to increasing tariffs, which could help avoid inflation spikes. This news led to a broad rally in global stocks and US futures, with the S&P futures rising 0.3% and Nasdaq 100 futures gaining 0.6%. Analysts view this gradual ramp-up in tariffs as a less aggressive strategy that could mitigate inflation risks, boosting market optimism. The dollar's drop was significant, marking its largest decline since early January, with risk-sensitive currencies appreciating against it. Despite this temporary setback, many financial experts predict the dollar will strengthen in the long term due to ongoing US economic outperformance. The market is now keenly watching for any denial from Trump regarding the tariff strategy, which could influence currency movements further.