The US dollar (USD) started the week on a stronger footing against its major peers, supported by safe-haven demand and diminishing odds of a Federal Reserve (Fed) rate cut anytime soon. Risk sentiment soured as markets braced for the July 9 deadline, when the United States (US) is expected to formally notify trading partners of new tariffs potentially as high as 70%, targeting over 100 countries.

The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, moved higher during the early American trading hours. At the time of writing, the index was trading around 97.40, near the previous week's high, and was up 0.35% on the day, as investors preferred the US dollar amid lingering global trade tensions and cautious market sentiment.

With the July 9 deadline looming, US President Donald Trump has stepped up his tariff campaign. On Sunday, he said the US would begin sending final, non-negotiable tariff letters to countries starting Monday. Trump said about 12 to 15 letters would be sent on the first day, with more to follow. The letters will outline tariffs that vary depending on a country's trade history, ranging from 10%–20% and potentially up to 70%.

The ongoing trade tensions and policy uncertainty from Washington have drawn strong criticism from the BRICS nations (Brazil, Russia, India, China and South Africa), which have also condemned the recent US and Israeli military strikes on Iran. In a joint statement after their summit in Rio de Janeiro on Sunday, the bloc expressed "serious concerns about the emergence of unilateral tariffs and non-tariff measures," which they said were "inconsistent with WTO (World Trade Organization) rules."

In response, President Trump reiterated, stating on Sunday that any country that supports what he called the "anti-American policies" of the BRICS bloc would face additional tariffs of 10%. "There will be no exceptions to this policy. Thank you for your attention to this issue!" Trump posted on Truth Social. The strong rhetoric further rattled markets, strengthening the appeal of the greenback as investors seek safety amid rising geopolitical and trade-related risks. (alg)

Source: FXstreet