US Dollar Index moves below 97.50, while traders adopt caution amid rising risk aversion

• US Dollar Index may regain ground as safe-haven demand rises due to escalating tariff offensive.
• President Trump has signed an executive order delaying the implementation of new tariffs from July to August 1.
• The Trump administration announced new tariffs of up to 40% on 14 countries.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is retracing its recent gains registered in the previous session and trading around 97.30 during the Asian hours on Tuesday.

The DXY recoded over 1% gains on Monday as markets grappled with an escalating tariff offensive. The White House announced late Monday that US President Donald Trump has signed an executive order delaying the implementation of new tariffs from July to August 1, per Bloomberg.

The Trump administration announced levies of 25% on goods from Japan and South Korea, with threatens to escalate tariffs if the two nations retaliate. The US also imposed 25% rates on Malaysia, Kazakhstan and Tunisia, while South Africa would see a 30% tariff and Laos and Myanmar would face a 40% levy. Other nations hit with levies included Indonesia with a 32% rate, Bangladesh with 35%, and Thailand and Cambodia with duties of 36%.

US President Donald Trump posted on social media on Monday that "Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy."

The US Dollar came under pressure amid growing expectations of deeper interest rate cuts by the Federal Reserve. However, stronger-than-expected US jobs data helped temper those concerns. Despite this, the Greenback may remain vulnerable due to rising fiscal worries, especially after President Trump signed his signature "Big Beautiful Bill" into law on Friday, a sweeping package of tax reductions and increased government spending.