Dollar Resurgence: Tariffs Fuel Rally, Global Markets in Turmoil

Overview: Dollar Surges as Tariffs Fuel Global Uncertainty

• U.S. Dollar Strengthens
  • Trump confirmed tariffs in Canada, Mexico, and China will take effect on March 4 with no extensions.
  • The Dollar reversed a five-day bearish trend, gaining traction amid trade tensions.
  • Key technical level to watch: 106.462 on the DXY for further bullish confirmation.
• Trump’s Trade Policies Increase Market Volatility
  • Additional 10% tariffs on China, effectively doubling existing duties, pushed USD/CNH higher.
  • The firm U.S. stance on tariffs heightened economic and geopolitical uncertainty.
  • Global markets reacted negatively, with investors shifting toward risk-off sentiment.
• Volatility Index (VIX) Spikes
  • The rising fear gauge signals increased market uncertainty.
  • Investors are bracing for potential economic disruptions and currency volatility.
  • Safe-haven assets like Gold and Bitcoin declined despite rising risk concerns.
• Global Market Response
  • Foreign currencies weakened as the strengthened Dollar applied downward pressure.
  • EUR, GBP, AUD, and NZD retreated, struggling against Dollar dominance.
  • Stock markets showed mixed reactions, as fears of slower global trade growth mounted.
• Key Focus Moving Forward
  • Monitoring 106.462 on the DXY for further Dollar strength or possible reversal.
  • Trade war escalation risks remain high as China, Canada, and Mexico consider countermeasures.
  • Investors will closely watch U.S. economic data and Federal Reserve policy shifts.

Dollar Soared as Tariffs Take Effect Next Week

Daily

Dollar bears lost control as Trump confirmed that tariffs on Canada and Mexico will take effect next week, with no indication of an extension. This announcement fueled a surge in the Dollar, reversing the five-day bearish trend.

As forecasted in ACY SecuritiesUSD on Decline: Uncertainties Driving the US Dollar For Furt… and  ACY SecuritiesUS Dollar Outlook: Paused Downtrend or Just a Breather?​ price has reacted at the Daily Fair Value Gap. From a technical perspective, the key level to watch is 106.462; a break below this level could confirm further downside continuation.

We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled. China will likewise be charged an additional 10% Tariff on that date.” - Trump

Unless Trump sees improvements in Canada and Mexico’s border security measures, tariffs will remain a looming threat, particularly for the U.S.'s neighboring trade partners.

On-going Tariffs

1-Hour

As outlined in our previous post, the Dollar faced indecisive price action as Trump’s contradictory statements on tariff plans for Canada, Mexico, and the EU fueled uncertainty. With no confirmation from the White House regarding a possible extension, the Dollar remained unattractive since February 3.

However, as seen in the chart, both bullish and bearish scenarios were mapped out. Currently, the bullish scenario is playing out, driven by geopolitical concerns that are strengthening the Dollar’s position.

US GDP Resilient Despite Inflation Concerns

A positive economic reading could provide a boost to the USD, signaling that despite inflation and lower employment, the U.S. economy remains resilient and capable of recovery. - from Technical Outlook USD Seeks Traction Amid Global Volatility market analysis of ACY ACY SecuritiesTechnical Outlook: USD Seeks Traction Amid Global Volatility​

Risk-Off Sentiment Right at the Corner

Volatility Index - Daily

Market uncertainty is rising as the fear gauge climbs, driven by the U.S. maintaining its firm stance on tariff policies affecting North America, Asia (particularly China), and Europe.

This White House initiative continues to strengthen the Dollar, exerting inverse pressure on foreign currencies, amplifying global market volatility.

CNH: 10% Additional Tariff Threat

With Trump's confirmation of an additional 10% tariff, duties on China have now doubled, causing the USD/CNH to surge.

This escalation could further worsen trade tensions with China, set to take effect on March 4, alongside tariffs on Canada and Mexico.

Foreign Currencies - Global Meltdown

As the Dollar gains momentum and shows signs of a potential bullish reversal, global markets are feeling the pressure. Major foreign currencies are weakening, while Gold and Bitcoin—often considered safe-haven assets—have declined, reflecting a shift in market sentiment.

Investors appear to be rotating out of risk assets as the strengthened Dollar exerts downward pressure on commodities and digital assets, signaling a broader risk-off environment.

AUD

NZD

EUR

GBP

CAD

CHF

Gold

BTC

Approach in the Market

As Dollar continues its potential reversal move, for foreign currencies:

• Short pairs with USD as the quote currency 
  • AUDUSD, NZDUSD, EURUSD, GBPUSD, XAUUSD
• Long pairs with USD as the base currency 
  • USDCAD, USDCHF, USDJPY

Technical Approach & Risk Management

Don’t chase the market. Best to wait for structures first then a breakout to lessen risk and have an optimal stop loss placement behind the created structures.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.