The USD found support in early trading as investors adopted a more cautious stance ahead of critical trade and economic developments. The spotlight remains on the July 9 tariff deadline, with widespread expectations that a 10% baseline tariff will be implemented for most countries from August 1. While Treasury Secretary Scott Bessant sought to downplay recent letters sent to trading partners, describing them as non-final, President Trump escalated tensions by threatening additional tariffs on nations aligning with BRICS. Over the weekend, BRICS leaders condemned Washington’s trade measures and criticised recent US military actions in Iran, amplifying geopolitical uncertainty.
Markets will closely watch for any last-minute trade agreements ahead of Wednesday’s tariff deadline, which could dictate near-term risk appetite and USD performance. The release of the Federal Reserve’s meeting minutes is also highly anticipated and may provide further insight into potential adjustments to interest rate projections and the central bank’s forward guidance.
The USD is likely to remain supported in the early part of the week on safe-haven demand as trade tensions dominate headlines. However, if the Fed minutes suggest a dovish tilt, this could temper USD gains later in the week.
In the UK, May GDP data is due Friday, with forecasts pointing to a modest recovery following April’s contraction. Should growth underperform expectations, the GBP may face renewed pressure after last week’s shift in sentiment.
