The US dollar weakened as global market players entered a risk-averse phase following President Donald Trump’s new tariff threat against Europe, which has sparked concerns of a possible trade war.
Investors turned to safe haven assets such as the Swiss franc, while the euro and pound were supported by outflows from the US dollar, even though tariffs typically weigh on European currencies.
The pattern is reminiscent of last year, when policy uncertainty from Washington consistently weakened the US dollar while increasing global risks.
However, analysts warned that the US dollar’s status as a safe haven is not easily eroded, given the unrivaled size and liquidity of the US financial market.
In Asia, the Japanese yen remained under pressure on domestic political uncertainty and the risk of greater fiscal stimulus, keeping it close to levels that could potentially trigger official intervention.
Finally, fragile risk sentiment weighed on cryptocurrencies, while the Chinese yuan strengthened after growth data met government targets and the central bank’s firmer rate-setting.
