The US Dollar edges lower as markets perceive a more lenient approach to reciprocal tariffs.

• Leaked Signal chat comments from US Vice President JD Vance regarding Europe could pose a setback for the Trump administration.
• Meanwhile, President Trump announces “secondary tariffs,” citing Venezuela’s oil exports as an example.
• The US Dollar Index briefly tests 104.50 but struggles to break above the level.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against a basket of six major currencies, is showing signs of instability following concerning developments involving US President Donald Trump and Vice President JD Vance. As of Tuesday, the index hovers slightly above 104.00, with market participants digesting two key developments.

The first major market driver stems from President Trump, who has imposed a 25% “secondary tariff” on all goods originating from countries that continue to purchase oil from Venezuela. While he scaled back the scope and intensity of reciprocal tariffs set to take effect on April 2, Trump hinted at additional targeted tariffs on automobiles, aluminum, pharmaceuticals, semiconductors, and lumber, according to Bloomberg.

Simultaneously, markets are closely watching reactions from the European Union after a US news editor was inadvertently added to a Signal chat group that included several high-ranking Trump administration officials, such as Vice President JD Vance, National Security Advisor Michael Waltz, Defense Secretary Pete Hegseth, and Secretary of State Marco Rubio. According to the Financial Times, JD Vance’s remarks in the chat outlined his vision for imposing tariffs on the EU to fund US military operations against Houthi rebels. This revelation not only raises concerns about the US’s policy direction toward Europe but also highlights security risks, as discussions on US military operations, weapons inventories, and strategic plans were conducted through a third-party messaging platform.

Equity markets are displaying a mixed performance this Tuesday, with Chinese indices facing notable declines. The Hang Seng Index ended the session down more than 2%. Meanwhile, European stocks are edging higher, gaining over 0.50%, while US futures are beginning to shift into positive territory.

The US 10-year Treasury yield hovers near 4.34% after Monday’s bond selloff, driven by a rally in equities.