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The US dollar falls as the uncertainty over tariffs weighs on the US stock market.

The US dollar falls as the uncertainty over tariffs weighs on the US stock market.

After a strong rally on Monday, global stocks edged up slightly on Tuesday on hopes that U.S. president Donald Trump will take a more moderate approach to tariffs. The dollar also eased from its three-week high. European shares led the rally, while Wall Street stocks closed with a modest gain after fluctuating between modest gains throughout the session. This follows a strong climb on Monday, after Trump said that not all his threatened levies will be imposed by April 2, and some countries might get breaks.

Vinny Bluau, director of Fixed-Income Capital Markets at Raymond James, Memphis, Tennessee, said: "Consumers remain pessimistic regarding their income prospects and they are still concerned about tariffs."

The narrative is shifting to the idea that tariffs will impact growth more than inflation. The U.S. stock market lost ground, after initially opening higher. This was due to a drop in consumer confidence, which fell by 7.2 points in March. This is the latest of a series of readings showing a cooling in sentiment.

The Dow Jones Industrial Average gained 4.18 points or 0.01% to 42,587.50. The S&P 500 rose 9.08 points or 0.16% to 5,776.65 while the Nasdaq Composite grew 83.26 or 0.46% to 18,271.86. The MSCI index of global stocks rose 0.2% or 1.74 points to 853.47, while the pan-European STOXX 600 closed at 0.67%. This was boosted by the Ifo Institute's survey that revealed a rise in German business morale during March. The stock market has shown signs of bottoming out in recent days after being under pressure from uncertainty about tariffs and their potential to slow down the global economy.

The dollar index which measures the greenback in relation to a basket against currencies and has risen to its highest level for three weeks, 104.46, lost 0.1%, falling to 104.19.

The euro fell 0.06% to $1.0793.

The dollar fell 0.54% against the Japanese yen to 149.88, while the pound rose 0.18% to 1.2942.

Investors also assessed possible tariff impacts on the Federal Reserve’s monetary policies. U.S. Treasury yields fell slightly. Fed Governor Adriana Kugler stated that the central bank’s current policy is restrictive and well-positioned. However, progress towards the 2% goal has slowed down and the recent increase in goods inflation data was "unhelpful." John Williams, President of the Federal Reserve Bank of New York, said that firms and households "experience heightened uncertainty" regarding what lies ahead in terms of the economy. These comments follow Atlanta Federal Reserve President Raphael Bostic's Monday statement that he expects the Fed to make only one 25-basis point cut this year.

The yield on the benchmark 10-year U.S. notes dropped 1.6 basis points, to 4.315%. After the sale of $69 Billion in two-year bonds, yields extended their declines for a short time. Crude prices reversed a previous advance after the U.S. signed separate agreements with Ukraine, Russia and other countries to ensure safe navigation on the Black Sea.

U.S. crude oil settled down by 0.16% to $69 per barrel. Brent settled at $73,02 per barrel up 0.03% for the day.

(source: Reuters)