The U.S. dollar is navigating a period of high volatility following a landmark Supreme Court ruling that struck down President Trump’s sweeping emergency tariffs. While the decision was initially seen as a catalyst for global growth, the market remains cautious as the administration moves to implement replacement levies under alternative legal authorities. The U.S. Dollar Index (DXY) recently tested a 97.89 level, marking its strongest weekly performance in four months. However, the currency remains under pressure as traders weigh the legal constraints now placed on executive trade powers. The court’s 6–3 decision invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA), effectively reducing the trade-weighted average U.S. tariff rate from 15.4% to 8.3%. In an immediate countermove, the White House announced a new 10% global tariff under Section 122 of the Trade Act of 1974. This temporary surcharge is slated for 150 days, after which it would require Congressional approval. Market uncertainty has intensified as President Trump subsequently signaled a potential hike of these new levies to 15%, leaving businesses and international partners in a state of flux. The fiscal outlook is further complicated by the potential for $175 billion in customs refunds. Analysts warn that returning these funds to importers could significantly widen the U.S. fiscal deficit, adding a layer of long-term structural weakness for the greenback. Geopolitical tensions are providing a counter-narrative for the dollar’s trajectory. Increasing friction between the U.S. and Iran has pushed Brent crude prices toward 6-month highs, with some projections suggesting a climb to $91 per barrel if supply disruptions persist. These tensions have bolstered safe-haven demand, keeping the dollar and gold—now trading above $5,000—elevated despite the domestic policy setbacks. Equities have shown resilience, with the S&P 500 rising 0.69% and the Nasdaq gaining 0.90% following the ruling. Investors appear to be focusing on the removal of "reciprocal tariffs," which had previously placed heavy burdens on major trading partners like India, where 55% of exports are now expected to be free from 18% duties. Looking ahead, the market focus shifts to the Federal Reserve's next move. With the core PCE price index and fourth-quarter GDP data looming, the Fed's stance on inflation will be critical. Current market pricing shows expectations for only two rate cuts in 2026, a hawkish shift from previous estimates that may continue to provide a floor for the dollar amidst the ongoing trade policy overhaul.