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The U.S. dollar weakened on Monday after briefly rebounding from a multi-year low, as investor confidence in the world’s reserve currency remained fragile amid renewed tariff tensions triggered by former President Donald Trump’s announcements.
Market participants entered the week bracing for increased volatility, following a series of abrupt decisions surrounding U.S. import tariffs. Trump’s initial imposition and subsequent walk-back of trade levies left investors unsettled, contributing to confusion across currency markets.
During the early Asian trading session, the greenback erased early gains, hovering near a 10-year low against the Swiss franc, trading around 0.8188 USD/CHF. The British pound held strong at $1.3099, preserving most of last week’s 1.7% rally, while the New Zealand dollar climbed to a four-month high at $0.5860.
Adding to the instability, Trump stated on Sunday that a new round of tariffs targeting imported semiconductors would be unveiled the following week, while also hinting at potential exemptions for certain industry players. Just days prior, the White House had announced temporary tariff relief for smartphones, computers, and other electronics largely sourced from China—only for Trump to later warn the exemptions would be short-lived.
According to Tony Sycamore, market analyst at IG, the situation remains erratic. “So far, these actions have been handled with unpredictability and excessive force, generating significant market uncertainty. These storm clouds are still hanging over the markets,” he said.
The dollar also declined against the Japanese yen, dropping 0.22% to 143.24 USD/JPY, further illustrating investor anxiety.
The ongoing unpredictability in U.S. trade policy is keeping currency markets on edge. For investors, the dollar’s weakness reflects broader concerns about geopolitical risk and inconsistent policy direction. In the near term, traders should monitor tariff-related headlines closely, as they will likely continue to drive sharp movements in major currency pairs. Diversifying across safe-haven assets such as the Swiss franc or Japanese yen may offer strategic protection.
Source: Reuters (via TradingView)
