Concerns surrounding US trade policies and their potential economic impact triggered a significant sell-off in the US dollar this Wednesday. The currency faced intense pressure, marking one of its most substantial single-day declines in recent memory.
The WSJ Dollar Index reflected this downturn, plunging 1.5% to close at 97.64. This represents the index’s steepest daily fall since November 2022. The slide occurred despite the White House announcing a 90-day suspension for *most* impending tariffs, although a universal 10% tariff remains, and levies on Chinese goods were increased to 125%. Market strategist Marc Chandler from Bannockburn highlighted the persistent risk, stating, “The effective average tariff in the US is now 24% instead of 27%. It remains a threat to growth and price stability.”
This decline extended a losing streak for the dollar index, marking its third consecutive session of losses. Adding to the dollar’s weakness was the release of March inflation figures. The data revealed a 2.4% year-over-year increase, falling short of the anticipated 2.6%. Kyle Chapman, an analyst at Ballinger Group, commented on the implications: “This report nudges the Fed towards additional cuts at the margin, but data dependency becomes less meaningful when the previous trajectory can no longer be relied upon.” Lower inflation typically fuels expectations of interest rate cuts, further pressuring the currency, though global trade tensions complicate the outlook.
Global Reactions and Currency Performance
The turbulence surrounding US trade policy drew sharp criticism from international figures. François Villeroy de Galhau, Governor of the Bank of France, asserted that recent events have “undermined confidence in the US currency,” adding that the Trump administration “has proven inconsistent in defending the dollar’s role.” He suggested this could bolster the euro’s international standing. This sentiment was echoed by Commerzbank strategist Ulrich Leuchtmann, who noted, “The euro has benefited from the US chaos, as it is the only serious alternative to Treasuries when seeking safe havens.” Analysts at ING also warned that the “volatile US tariff approach demands a higher risk premium” on American assets. Reflecting this broad weakness, the dollar fell significantly against major counterparts, dropping 2% against the Japanese yen and 1.6% against the euro, while also losing ground to the Swiss franc and the British pound.
Maxwell Reed is the first editor of Cryptovista360. He loves technology and finance, which led him to crypto. With a background in computer science and journalism, he simplifies digital currency complexities with storytelling and humor. Maxwell began following crypto early, staying updated with blockchain trends. He enjoys coffee, exploring tech, and discussing finance’s future. His motto: “Stay curious and keep learning.” Enjoy the journey with us!