US Softens Tariffs on Steel and Aluminium: Is the Dollar’s Slide About to Hit a Wall?

If you want to know when the dollar’s slide will finally find a floor, don’t bother with the Fed minutes or the latest CPI whisper. Watch the White House. In a move that would have been unthinkable just a few years ago, the Trump administration is reportedly preparing to soften its steel and aluminium tariffs after a global trade backlash. The news broke in the early hours of February 13, 2026, via Invezz, and the market barely blinked. But beneath the surface, the tectonic plates of global trade are shifting, and the dollar’s next move could be anything but boring.

Let’s get the facts straight. The US has been under mounting pressure from businesses and trading partners to roll back its protectionist stance. The tariffs, originally imposed in 2018 as part of Trump’s 'America First' doctrine, have been a perennial thorn in the side of global supply chains. They’ve also been a convenient scapegoat for inflation, supply bottlenecks, and, depending on who you ask, the decline of Western civilization. Now, with the US economy showing signs of fatigue and the dollar sliding against a basket of peers, the administration is blinking.

The timing is no accident. US stocks have rallied, but the dollar has been on a slow-motion slide, with foreign purchases of Treasurys drying up and the 'Sell America' trade gaining traction. The latest CPI print is due out today, and traders are bracing for another dose of macro volatility. Meanwhile, the US just inked a trade deal with Taiwan, lowering tariffs to 15% and securing a pledge from Taipei to boost American goods purchases. The message is clear: Washington wants to shore up its export base and stem the dollar’s decline.

But the market isn’t buying it, yet. The DXY is stuck in a rut, and the euro is flirting with multi-month highs. The yen, for all its woes, is still the cleanest dirty shirt in the FX laundry. The dollar’s slide has been orderly, but the risk is that a sudden policy shift, like a tariff rollback, could trigger a violent reversal.

Let’s put this in context. The Trump tariffs were always more about politics than economics. They were designed to punish China and reward Rust Belt voters, not to fix the trade deficit. But the unintended consequences have been profound. US manufacturers have struggled with higher input costs, global supply chains have been rerouted, and allies have retaliated with tariffs of their own. The net effect has been a drag on global growth and a boon for currency volatility.

Now, with the US economy slowing and inflation still sticky, the calculus is changing. The administration is betting that a softer trade stance will boost exports, strengthen the dollar, and placate restive allies. But the market is skeptical. The dollar’s slide has been driven by structural factors, twin deficits, waning foreign demand for Treasurys, and the rise of alternative reserve assets. A tweak to tariffs won’t fix that overnight.

Still, traders ignore policy pivots at their peril. The last time the US softened its trade stance, the dollar staged a face-ripping rally as shorts scrambled to cover. The risk is that a similar dynamic plays out here, especially if today’s CPI print surprises to the upside. The market is leaning short dollars, and positioning is crowded. If the narrative shifts, the unwind could be brutal.

Cross-asset flows matter. US equities have been the global safe haven, but that trade is looking tired. Commodities are flatlining, with DBC stuck at $23.805, and tech is wobbling after the AI bubble deflated. The real action is in FX, where volatility is picking up and traders are looking for the next catalyst. A tariff rollback could be just the ticket.

Strykr Watch

Technically, the DXY is testing key support at 101.50, with resistance at 103.00. The euro is pressing against 1.12, while the yen is holding below 145. The 50-day moving average on the DXY is sloping lower, but momentum is waning. RSI is oversold at 38, suggesting the dollar is due for a bounce.

In the options market, 1-month implied vol on major pairs is creeping higher, with EURUSD at 8% and USDJPY at 9.5%. Risk reversals are tilting in favor of dollar calls, a sign that traders are hedging against a reversal. The market is pricing in a 70% chance of a Fed cut by June, but that could change if the CPI print comes in hot.

Watch the tape closely. If the administration follows through on tariff relief, expect a knee-jerk rally in the dollar, especially against high-beta currencies. The euro is vulnerable to a squeeze, and the yen could see a sharp reversal if risk sentiment sours. The real tell will be in Treasurys, if foreign demand picks up, the dollar will follow.

The risk is that the policy shift is too little, too late. If the market sees it as a sign of desperation, the dollar could break lower and trigger a broader risk-off move. But the setup is asymmetric. Positioning is crowded, and the pain trade is higher.

On the opportunity side, look for tactical long dollar trades on a break above 103.00 DXY, with stops below 101.50. Short euro on a move below 1.11, and fade yen strength if USDJPY reclaims 147. The CPI print is the wildcard, if it surprises to the upside, the dollar squeeze will be swift and ugly.

Strykr Take

The market is sleepwalking into a policy pivot. The US is about to blink on tariffs, and the dollar is primed for a squeeze. Traders are leaning short, but the setup is ripe for a reversal. Watch the headlines, watch the CPI, and don’t get caught offside if the dollar finds its footing. This is the kind of tape that rewards nimble traders and punishes consensus. The pain trade is higher.