The US dollar index dropped over 1% to 101.5 on Thursday, hitting a six-month low as softer inflation data and easing trade tensions weighed on the currency. Core CPI rose just 2.8% year-on-year — the slowest pace since March 2021 — easing fears that the ongoing tariff battle will severely harm the US economy.
This came alongside President Trump's decision to suspend higher tariffs on most US trade partners for 90 days, though China still faces a steep 125% rate.
The US continues to apply a 10% baseline tariff broadly, with exemptions for key sectors like semiconductors, pharma, and energy, while autos and metals still face a 25% levy. The EU also paused new tariffs for 90 days to allow negotiations. At the same time, falling Treasury yields and strength in safe-haven currencies like the yen and Swiss franc are putting added pressure on the dollar.
Source: Trading Economics
