Dollar Gains Ground as Trump Softens Stance on Tariffs

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The dollar reached a three-week high against the yen early on Tuesday and strengthened across the board, buoyed by strong U.S. services data and cautious optimism about the tariff situation. President Donald Trump indicated that not all of his proposed tariffs would be enforced on April 2, and some countries might receive exemptions. This helped boost the dollar and improved market sentiment on Wall Street, easing concerns about a slowdown in U.S. growth. The dollar rose 0.9%, breaking above 150 yen, and reached a three-week high of 150.92 yen in the Asian morning.

The upbeat services data in the S&P Global flash U.S. PMI figures pushed U.S. yields higher, coinciding with weakness in Japan, where both services and manufacturing sectors were in contraction.

The dollar also hit its highest point since March 6, climbing to $1.0781 per euro, as the euro’s rally began to lose momentum. It was last trading at $1.0796, while the British pound fell to a two-week low of $1.2883 before recovering to $1.2918 in Asia. The U.S. dollar index rose for the fourth consecutive session, settling at 104.3.

However, with Trump’s insistence that automobile tariffs will soon be imposed, and concerns about U.S. growth, the market remains uncertain about the next move. Data from the Commodity Futures Trading Commission showed that speculators turned net bearish on the U.S. dollar for the first time since October, although the position is close to neutral.

Brent Donnelly, President of Spectra Markets, noted that the market is uncertain about how to approach the dollar. He pointed out that the EUR/USD trade has fizzled out, and the strong moves in rate differentials and equity performance are losing steam. The idea that tariffs are definitely bullish for the dollar has been challenged by recent market behavior, making it hard to predict what will happen once details of the tariffs are revealed next week.

The Australian dollar received some support from optimism around Trump’s tariff flexibility, holding steady at $0.6282. Australia’s government is set to unveil a pre-election budget at 0830 GMT, focused on cost-of-living relief.

Bitcoin saw a 3% increase, trading around $87,400 in Asia, while the New Zealand dollar dipped to a one-week low of $0.5725.

Paraphrasing text from "Reuters" all rights reserved by the original author