Dollar Trims Weekly Advance as New Tariff Plan Clouds Outlook

Anya Andrianova, Carter Johnson and Miles J. Herszenhorn

Sat, February 21, 2026 at 6:27 AM GMT+9 3 min read

In this article:

DX-Y.NYB

-0.01%

(Bloomberg) – The dollar pared its weekly gain as President Donald Trump said he planned a new tariff on imports after the Supreme Court struck down his levies, clouding the investment outlook for the greenback.

The Bloomberg Dollar Spot Index sank about 0.2% on Friday, leaving it up a bit more than 0.6% on the week, for its biggest gain since November. While the week ended on a sour note for the greenback, the reaction to the fallout from the long-awaited legal ruling was modest. Treasury yields edged higher, while stocks climbed.

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The world’s primary reserve currency drew demand ahead of the tariff decision from data showing stubbornly high inflation, which may complicate the Federal Reserve’s path to cutting interest rates further, and as a buildup of US forces in the Persian Gulf fueled a haven bid.

“Today’s announcements don’t change the underlying macro backdrop of elevated tariffs, economic uncertainty, the Fed having put in some insurance cuts and the data actually starting to look better in the US,” said Aroop Chatterjee, a strategist at Wells Fargo. “This limits the extent of dollar weakness.”

The US currency declined after the court decision as the ruling highlighted the fiscal concerns that have helped sour sentiment toward the greenback over the past year, and as fresh questions arose over how trading partners will respond to Trump’s response.

The dollar has been under pressure in recent months as other major central banks held rates steady or signaled hikes, while the Fed was expected to deliver further cuts — a view bolstered by Trump’s nomination of Kevin Warsh to become the next Fed chair. The Bloomberg greenback index slumped 8% in 2025, its biggest annual drop in eight years, in part as Trump’s levies sparked concern about the US economic backdrop.

Figures released Friday showed that speculative traders increased bets against the dollar in the past week, turning the most bearish since 2021. They held about $22.2 billion in short positions, versus $19.9 billion the prior period, according to Commodity Futures Trading Commission data for the week through Feb. 17.

Trump said after the ruling that he would sign an order imposing a 10% global tariff and pledged a raft of investigations that could allow him to enact more import taxes. Treasury Secretary Scott Bessent said revenue collected from tariffs will be “virtually unchanged” in 2026.

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What Bloomberg Strategists Say…

“Tariffs were a meaningful revenue stream, and their removal widens the government’s financing gap. At the same time, the New York Fed has estimated that the burden of those levies fell largely on US consumers, implying that their reversal should ease price pressures and, over time, inflation expectations.”

-Brendan Fagan, Markets Live strategist. For the full note click here.

Also boosting the dollar this week, minutes from the Fed’s latest meeting showed that officials were wary of cutting rates when they met last month, with several suggesting the central bank may need to eventually raise borrowing costs if inflation remains elevated.

The US economy grew less than expected last quarter, while a monthly measure of underlying inflation rose the most in nearly a year in December, data showed Friday.

(Updates prices, adds futures positioning data.)

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