The dollar will be pulled back from its six-week low, but tariff tensions continue
By Saqib Iqbal Ahmed
NEW YORK (Reuters) – The US dollar rose on Tuesday, rebounding against the euro from a six-week low, even as investors feared the potential economic damage from the trade war caused by President Donald Trump’s administration.
“We had a big sale in the dollar, but today we’re bounced a bit… I don’t think there was much fresh news that the dollar has changed in any meaningful way.”
“Bounce is still quite limited and I think it’s pretty limited,” he said.
The dollar rose 0.9% against the yen at 144.00. The euro fell 0.6% to $1.1371, bringing its six-week high to $1.1454. Previous data showed that inflation in the Eurozone is below the European Central Bank’s 2% target, supporting expectations for interest rate cuts later this week.
The dollar has dropped by about 9% yearly against the euro.
The global equity market has recovered significantly from early April sales, triggered by a recurring saga at the Trump tariff threat standard, but the greenback is under pressure.
The US duties on imported steel and aluminum have been set at 50%, doubled since Wednesday.
President Trump and Chinese President Xi Jinping are likely to make a call soon to resolve trade differences, Treasury Secretary Scott Bescent said on Sunday, but on Monday there was an angry rejection from China’s Commerce Department that Beijing had violated the trade deal.
“Trade development remains important. The report suggests that China is leveraging the US through chip supply chain and rare earth management,” Strategist Francesco Pesole said.
“Trump and Xi Jinping are scheduled to speak this week, and past in-person talks have sometimes eased tensions, leaving room for positive surprises that can help the dollar at some point this week,” he said.
On Tuesday, data showed job openings increased in April, but layoffs were featured in a move consistent with a slower labour market amid a dim economic outlook due to tariffs.
Federal Reserve officials reasserted on Tuesday about monetary policy caution as Trump’s trade war continues to inject a substantial amount of uncertainty and risk of economic weakness into the outlook.
Financial worries have also created a wide range of “SelAmerica” themes, which saw stock assets, which have seen financial obligations falling from stocks in recent months.