The dollar was rising to a nearly three-week high against a basket of currencies after President Donald Trump threatened a 30% tariff against the EU and Mexico at the weekend.
One assumption investors are making is that other countries will cave in to Trump’s demand and that potentially the EU is willing to accept a trade deal that favors the U.S., Commerzbank’s Thu Lan Nguyen said in a note.
“If Trump actually manages to extract significant concessions from U.S. trading partners by threatening them with tariffs, this could be seen as positive for the dollar.”