Dollar strengthens as global recession fears drive investors toward safe-haven currencies

The U.S. dollar appreciated on Monday as investors sought refuge in safe-haven currencies amid escalating concerns over a potential global recession. These apprehensions were intensified by President Donald Trump’s recent implementation of comprehensive tariffs on key trading partners.​

Market reactions:

• Global Equities: Stock markets worldwide experienced declines. Wall Street opened lower, following significant drops in Asian markets, as investors speculated that the heightened risk of a severe economic slowdown might prompt the Federal Reserve to consider an interest rate cut as early as May.​
  
• Currency Movements: The dollar reduced earlier losses against other safe-haven currencies. It rose 0.50% against the Japanese yen, reaching 147.605 yen, after an earlier decline of over 1.4%.​

Expert insights:

Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, commented on the market’s volatility:​

“The only thing we know for sure is that it’s volatile… But I think, overall, leaving aside the nuances, as it’s believed that tariffs are hurting global growth, the currencies that seem to be riskier — the dollar bloc and Scandinavian currencies — are underperforming.”​

Euro performance:

The euro declined by 0.39% to $1.091775, after earlier rising 0.7% to $1.1050.​

Dollar’s safe-haven status:

Traditionally viewed as a safe-haven asset, the dollar’s status appears to be diminishing amid growing uncertainties surrounding tariffs and their potential impact on U.S. economic growth.​

EU’s response:

In the coming days, European Union countries plan to present a united front against Trump’s tariffs. They are likely to approve an initial set of countermeasures targeting up to $28 billion of U.S. imports, ranging from dental floss to diamonds.​