## US Dollar Faces Volatility Pressure Amid Policy Expectation Changes

The (DXY) US Dollar Index is currently hovering around the 100-day moving average (100-DMA) at 98.58. Although the current situation remains relatively stable, Scotiabank experts warn that this calm may not last long. According to FX strategy chiefs Eric Theoret and Shaun Osborne, upcoming events could alter the trading landscape.

## Supreme Court Decision Could Cause Turbulence

This week will see two significant events. First, President Trump is expected to announce his choice for Federal Reserve (Fed) chair before the week ends. This selection appears to lean toward a substantial easing path, aligning with the administration’s preferences. Governor Miran has stated that a rate cut of over 100 basis points may be necessary in the coming year.

The second event is the Supreme Court’s ruling on future cases on Friday. This could include a critical decision regarding IEEPA tariffs—an enforcement tool favored by Trump. The court has shown hesitation over government arguments to defend dual tariffs and those related to fentanyl under IEEPA.

## Potential Impact on Currency Markets

If the Court rejects these arguments, the government still has other ways to reimpose tariffs, but the process could take time. In that scenario, the USD risks weakening in response—due to a temporary easing of trade tensions, leading to downward pressure on prices.

Currently, most major currencies are trading within a maximum of +/-0.1% against the USD. The MXN appears strongest, with gains exceeding 0.1%. Meanwhile, equity markets are fluctuating unpredictably, while key bond markets show better stability, with European yields decreasing by 4 to 6 basis points. However, US Treasury bonds are somewhat resistant.

## Technical Analysis and Outlook

From a technical perspective, analysts believe that the upward momentum of the DXY will face resistance above 98, especially at the 200-day moving average (DMA) at 98.88. This tug-of-war could persist until policy and legal decisions are announced in the coming days.