The US Dollar (USD) remains steady early Tuesday after gaining modestly against its major counterparts on Monday, as global markets adopt a cautious stance. While the economic calendar lacks high-impact data releases for the day, all eyes are on Federal Reserve (Fed) Chairman Jerome Powell’s testimony before Congress, which could inject volatility into the markets. Several other Fed policymakers are also scheduled to speak later in the American session.

Trump’s Tariff Move Shakes Trade Policy

In a significant policy shift, former US President Donald Trump has signed an executive order imposing sweeping 25% tariffs on all steel and aluminum imports into the US. Trump also hinted at potential future tariffs on automobiles, microchips, and pharmaceuticals. While the White House initially ruled out exemptions, Australian Prime Minister Anthony Albanese revealed that Trump has agreed to consider an exemption for Australia’s steel and aluminum exports.

USD Index Stays Above 108.00 Amid Market Uncertainty

The USD Index remains comfortably above 108.00 after a modest rise on Monday. Meanwhile, US stock index futures are in the red, losing between 0.2% and 0.35% ahead of Powell’s testimony.

Powell will present a prepared statement and answer questions during his testimony on the semiannual Monetary Policy Report before the Senate Banking, Housing, and Urban Affairs Committee, starting at 15:00 GMT. Traders will be looking for any hints regarding the Fed’s stance on inflation, interest rates, and overall economic outlook.

Currency Market Overview

• EUR/USD: The pair closed Monday marginally lower and continues to trade in a tight range around 1.0300 in the European session.
• GBP/USD: The British Pound remains under pressure, posting its third consecutive day of losses on Monday. The pair struggles to gain traction, hovering around 1.2350.
• USD/JPY: After a sharp decline last week, the pair corrected higher on Monday and has now stabilized near 152.00.

Gold Surges to Record High Above $2,940

Gold continues its bullish momentum, extending its uptrend with a 1.5% gain on Monday. During the Asian trading hours, XAU/USD hit a new all-time high above $2,940, before retreating slightly in the European session. However, gold remains comfortably above $2,900, reflecting strong demand as investors seek safe-haven assets amid economic uncertainties.

Market Watch: Key Events to Follow

• 15:00 GMT – Fed Chair Jerome Powell’s testimony before Congress
• Fed policymakers’ speeches throughout the American session

With Powell’s comments likely to influence market sentiment, traders and investors will be closely watching for any signals regarding future monetary policy decisions. Stay tuned for further updates as market dynamics unfold.