The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against a basket of six major currencies, fell again and traded under pressure around 103.25 at the time of writing on Tuesday (3/18), nearing a five-month low at a level not seen since October. The move came after several headlines, rising geopolitical uncertainty, and significant events that occurred throughout the day. Any headline could act as a catalyst to push the DXY to a near six-month low and below the 103.00 level.
On the geopolitical front, a high-stakes meeting between US President Donald Trump and Russian President Vladimir Putin is scheduled for Tuesday, with both sides set to discuss territory and dividing certain assets. This has raised concerns that Ukraine will be torn apart and the European Union (EU) and the North Atlantic Treaty Organization (NATO) will be strengthened to further increase their defense spending.
Meanwhile, Israel this morning violated a ceasefire with Gaza that began in January by attacking Hamas tactical installations and buildings. The military move comes after Israel and the US claimed Hamas had not kept its promise to release hostages. This, in turn, could trigger more attacks across the Red Sea by Houthi rebels and retaliation from Hamas.
The third major development is in German politics, with a vote on a €45 billion defense spending package that would extend to all European industries. If a deal and support can be reached with Germany's Greens, a two-thirds majority would be in place to push the plan through the Bundestag. The vote is expected to take place at 12:30 GMT.
On the economic data front, some US housing data is due, although geopolitical headlines will remain the main driver for Tuesday.
Source: FXStreet
