The US Dollar edges higher as the scope of US tariffs is set to expand by April

• The US Dollar posts modest gains on Wednesday as President Donald Trump confirms plans to expand tariffs on pharmaceutical and semiconductor imports by April.
• Meanwhile, the US Dollar Index (DXY) rebounds above 107.00 but remains in search of a clear direction this week.

The US Dollar Index (DXY), which measures the USD’s performance against a basket of six major currencies, is in focus as markets anticipate the release of the Federal Reserve’s (Fed) January meeting minutes. Traders see the DXY as well-positioned despite ongoing tariff and geopolitical developments.

Overnight, US President Donald Trump announced that car tariffs would be set at 25%, with pharmaceutical and semiconductor imports expected to be included under the same framework by April. Meanwhile, Trump sought to shift attention away from the lack of progress in the initial round of peace negotiations between US and Russian officials regarding Ukraine. He placed blame on Ukraine for the stalled discussions, suggesting that reaching an agreement may prove difficult.

On the economic front, market participants are closely watching the Federal Open Market Committee (FOMC) Minutes for insights into the Fed’s policy stance. With the US Dollar under pressure from weaker Treasury yields, a hawkish tone in the Minutes could push interest rates higher, diminishing the likelihood of rate cuts in 2025 and strengthening the Greenback as a result.