Dollar Declines Amid Renewed Trade Tensions

The U.S. Dollar

 Dollar Declines Amid Renewed Trade Tensions

The U.S. dollar declined against major currencies, including the yen and euro, as markets assessed ongoing uncertainty surrounding President Donald Trump’s trade policies and their impact on the economy.

The dollar fell to a three-year low against the Taiwanese dollar at 28.8150 amid speculation that Taiwan allowed its currency to appreciate as part of a trade deal with the United States.

Asian-Pacific currencies emerged as the main beneficiaries of the situation. The Australian dollar reached its highest level since last December, hitting 0.64935 U.S. dollars.

Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, said the dollar’s weakness against Asian currencies was partly due to the unwinding of large, unhedged investment positions, such as life insurance holdings in Taiwan, amid talk of new U.S. tariffs.

On Monday, the U.S. announced new 100% tariffs on foreign-produced films.

Treasury Secretary Scott Besant defended Trump’s tariff policies, insisting that the broader economic agenda—including tax cuts—would ultimately lead to long-term growth.

The dollar fell 0.73% against the yen to 143.885 and 0.50% against the Swiss franc to 0.82255.

Trump also confirmed he would not attempt to remove Federal Reserve Chairman Jerome Powell before his term ends in May 2026 but described Powell as "completely inflexible," reiterating calls for lower interest rates.

The Federal Reserve is set to meet on Wednesday and is widely expected to keep interest rates unchanged following a strong U.S. jobs report for March.

Markets now assign only a 37% probability to a rate cut in June, down from 64% a month ago.

The dollar briefly trimmed its losses against the yen after the April ISM report showed stronger-than-expected growth in the U.S. services sector, which makes up two-thirds of the American economy.

The Chinese yuan rose 0.12% in recent trading to 7.2014 per dollar.

In Europe, the euro climbed 0.15% to 1.131600 dollars, and the British pound gained 0.21% to 1.32950 dollars.