The U.S. dollar is under pressure, trading near a four-month low against major currencies as concerns over a potential global trade war dominate market sentiment. Investors have grown wary following U.S. President Donald Trump’s imposition of tariffs on key trading partners, with fears of an economic slowdown intensifying. Despite the tariff delays, the anxiety surrounding U.S. trade policy has caused investors to pull back from the dollar, reducing net long positions by nearly half since January.
In response to the growing uncertainty, investors have turned to safe-haven currencies like the Japanese yen and Swiss franc, sending both currencies to multi-month highs. The yen was up 0.25% at 147.68 per dollar, just below a five-month peak, while the Swiss franc reached its strongest point in three months. The euro, meanwhile, held steady at $1.0842, following its best weekly performance since 2009, bolstered by fiscal reforms in Germany.
The dollar index, which tracks the greenback against six major currencies, remained near a four-month low on Monday, reflecting a more than 3% decline from the previous week. The dollar’s weakening trend was compounded by a lackluster jobs report from the U.S. Labor Department, showing slower-than-expected job growth in February. This raised concerns about the resilience of the U.S. economy and its potential impact on Federal Reserve policy.
Further uncertainty came from Trump’s recent comments, which failed to alleviate fears that tariffs on Mexico, Canada, and China could trigger a recession. This has led to reduced investor confidence in U.S. assets, with some expecting the Federal Reserve to cut interest rates in the coming months. Meanwhile, other global currencies, such as the British pound and Australian dollar, showed moderate gains, while China’s yuan weakened following disappointing inflation data.
SOURCE: REUTERS