Greenback Reverses Course in Volatile Session
The U.S. dollar edged lower on Friday, breaking a four-day run of gains after the Supreme Court struck down President Donald Trump’s sweeping tariffs enacted under a national emergency law. In a 6-3 decision written by Chief Justice John Roberts, the court ruled that the administration exceeded its authority under the 1977 statute.
The ruling injected fresh uncertainty into currency markets, where traders had largely positioned for continued dollar strength earlier in the week.
Economic Data Sends Mixed Signals
Before the court decision, the dollar had strengthened following economic releases that painted a complicated picture of the U.S. economy. The Commerce Department reported that gross domestic product grew at a 1.4% annualized rate last quarter, significantly below the 3% pace forecast by economists surveyed by Reuters. Analysts noted that the figure was partly weighed down by the government shutdown.
At the same time, inflation data came in hotter than expected. The core personal consumption expenditures price index, which excludes food and energy, rose 0.4% in December after a 0.2% gain in November. On a year-over-year basis, core inflation climbed 3%, above the prior 2.8% reading and exceeding expectations.
These mixed signals complicated the outlook for monetary policy, with slower growth contrasting against persistent price pressures.
Administration Signals Alternative Tariff Plans
Following the Supreme Court ruling, President Trump indicated he would pursue alternative trade measures. He said he plans to sign an order imposing a 10% global tariff under Section 122 of the 1974 Trade Act and initiate additional investigations.
Treasury Secretary Scott Bessent stated that combining Section 122 authority with potential Section 232 and Section 301 tariffs could keep tariff revenue for 2026 largely unchanged.
Market participants are now watching how the administration responds and whether further legal battles will unfold. The court’s decision did not clarify whether previously collected tariffs must be refunded, a question that could prompt extended litigation.
Currency Markets React Cautiously
The dollar index, which tracks the greenback against a basket of major currencies, slipped 0.09% to 97.80. The euro rose modestly to $1.1779. Despite Friday’s pullback, the dollar remains up nearly 1% for the week, marking its strongest weekly performance since November.
In Europe, a business survey showed eurozone activity accelerated more than expected this month as manufacturing returned to growth for the first time since October. However, the services sector slightly underperformed forecasts.
Analysts noted that uncertainty surrounding trade policy and potential legal disputes over tariff refunds could continue to drive volatility. For now, the dollar’s direction reflects the balance between economic fundamentals, legal developments and investor positioning.
