Dollar Stuck in Limbo Amid Tariff Uncertainty

The US dollar was stuck in a tight range on Monday as markets struggled to gauge the impact of President Donald Trump's latest tariff threats, which were dealt a blow by the US Supreme Court. The court's decision to strike down Trump's use of emergency powers to impose so-called reciprocal tariffs has added to the uncertainty surrounding the US trade policy.

The dollar's lackluster performance came despite a strong US jobs report on Friday, which showed the economy added 225,000 jobs in January, beating expectations. Typically, such a report would boost the dollar, but the ongoing tariff uncertainty has kept investors cautious.

"The dollar is stuck in limbo, awaiting clarity on the US trade policy," said Jane Foley, senior currency strategist at Rabobank. "The Supreme Court's decision has added to the uncertainty, and until we get more clarity, the dollar is likely to remain range-bound."

Trump's use of emergency powers to impose tariffs on countries that he deemed to be taking advantage of the US had been a key concern for investors. The Supreme Court's decision to strike down this move has raised questions about the president's ability to unilaterally impose tariffs.

"The court's decision is a significant setback for the president's trade agenda," said Michael Feroli, chief US economist at JPMorgan Chase. "It's unclear how the administration will respond, but it's likely to lead to more volatility in the markets."

The uncertainty surrounding the US trade policy has been a major theme in the markets for several months. Trump's tariffs on Chinese goods, imposed last year, have led to a trade war between the two countries, which has had a significant impact on global trade.

"The trade tensions between the US and China are still a major concern for investors," said David Bloom, global head of FX strategy at HSBC. "Until we see a resolution to this issue, the dollar is likely to remain under pressure."

Despite the uncertainty, some analysts believe that the dollar's fundamentals remain strong. The US economy is still growing, and the Federal Reserve is expected to keep interest rates on hold for the foreseeable future.

"The dollar's fundamentals are still strong, but the trade uncertainty is a major headwind," said Marc Chandler, chief market strategist at Bannockburn Global Forex. "Once we get more clarity on the trade policy, the dollar is likely to rebound."

For now, the dollar is likely to remain stuck in limbo, awaiting clarity on the US trade policy. Investors will be watching the developments closely, and any signs of a resolution to the trade tensions could lead to a significant move in the dollar.

As the markets await clarity, the dollar's range-bound trading is likely to continue. The currency traded at 97.13 against a basket of major currencies on Monday, little changed from Friday's close.

In other currency news, the euro was flat against the dollar, while the yen rose 0.2% against the greenback. The pound was down 0.1% against the dollar, as investors awaited the outcome of the UK's general election.

Overall, the dollar's lackluster performance on Monday reflects the ongoing uncertainty surrounding the US trade policy. Until we get more clarity, the currency is likely to remain range-bound, awaiting the next development in the trade saga.