NEW YORK – The U.S. dollar remained largely unchanged against the euro on Monday, lingering near its weakest point in three years after a volatile performance last week pushed it into technically oversold territory.
At the same time, the greenback slipped against the Japanese yen, pressured by growing concerns over President Donald Trump’s unpredictable tariff rollouts, which have dented global confidence in the dollar as a reliable reserve currency.
What’s surprising investors is that the dollar is no longer moving in tandem with U.S. Treasury yields. Last week, yields edged higher even as the dollar declined, signaling potential capital outflows due to apprehension over the long-term impact of trade barriers.
“The chaos in policy decisions makes it nearly impossible to predict where interest rates or the broader economy will head even in the near term,” said Adam Button, chief currency analyst at ForexLive. “Uncertainty is pushing businesses to the edge, and it’s starting to weigh on consumer expectations and market sentiment. That concern is being reflected most clearly in the currency markets.”
According to Federal Reserve Governor Christopher Waller, the administration’s aggressive stance on tariffs could pose a serious threat to economic stability, possibly compelling the Fed to consider rate cuts to stave off a downturn despite stubbornly high inflation.
A survey from the New York Fed showed that Americans are bracing for the highest short-term inflation expectations since late 2023. At the same time, public sentiment toward household finances and job prospects appears to be souring.
Currency Market Snapshot
The euro was steady at $1.1359, after peaking at $1.1473 on Friday its highest level since February 2022.
Meanwhile, the dollar dropped 0.39% against the Japanese yen, settling at 142.93. It had touched 142.05 on Friday, marking a low not seen since September.
Bilal Hafeez, CEO of Macro Hive, pointed out that the dollar’s decline last week was unusually sharp falling within four standard deviations. While this often signals a potential rebound, Hafeez warned that if we are witnessing a structural shift in the global financial system, comparisons could be drawn to the 1970s collapse of the Bretton Woods agreement meaning previous rules may no longer apply.
Adding to market jitters, Trump announced plans to reveal new tariffs on imported semiconductors within the week. He noted, however, that certain firms might be given leeway. On Friday, the White House made a partial concession, excluding smartphones, laptops, and some other electronics mostly from China from immediate duties. But Commerce Secretary Howard Lutnick said Sunday that these items will soon face new tariffs alongside chips.
“Markets are trying to make sense of the mixed signals coming out of Washington,” said Nick Rees, head of macro research at Monex Europe. “This unpredictability is pushing investors away from the dollar and toward more stable assets.”
Trump also suggested he may lift certain auto-related tariffs already in effect, further fueling the uncertainty.
Japanese Prime Minister Shigeru Ishiba stated that Japan would not rush or concede heavily in upcoming trade talks with the U.S., while Economy Minister Ryosei Akazawa clarified that currency discussions would remain in the hands of top finance officials from both nations.
Other Major Currency Moves
- The dollar lost 0.18% against the Swiss franc, trading at 0.814.
- The British pound rose 0.88% to $1.3195.
- The Australian dollar jumped 0.84% to $0.6338, building on last week’s rally of over 4%.
- China’s offshore yuan weakened 0.35% to 7.307 per dollar after hitting a record low last week amid escalating trade tensions.
Data from China revealed a sharp rise in exports for March, as exporters scrambled to ship goods ahead of the next round of U.S. tariffs.
Bitcoin Continues to Climb
In the crypto markets, bitcoin saw a healthy uptick, gaining 1.90% to trade at $85,066.
