Dollar's Turbulent Ride Amid Trade War Confusion

The U.S. dollar faced instability as investors remained uncertain about the progress of Sino-U.S. trade negotiations. Despite some gains against the yen and Swiss franc, conflicting signals from leaders and mixed economic data fueled further uncertainty in the currency markets.

The U.S. dollar struggled to recover from losses amidst ongoing confusion over Sino-U.S. trade negotiations. Treasury Secretary Scott Bessent implied it was China's turn to make moves towards de-escalating tariffs. Meanwhile, President Trump claimed progress, although Beijing denied such claims, creating mixed signals for investors.

Currency strategist Carol Kong noted that current U.S. tariff policies are chaotic though some optimism exists as both sides seem to have softened stances slightly. Trading volumes were thin due to holidays in Japan, with the dollar managing marginal gains against certain currencies.

Economists remain on edge, with upcoming U.S. economic data crucial for gauging trade war impacts. Insights from these reports, particularly the jobs report, will test market reactions, as the dollar is increasingly viewed as a risk currency rather than a safe haven.

(With inputs from agencies.)