Dollar Dips as Tariff Drama Unfolds

The U.S. dollar weakened against major currencies following President Trump's reversal on tariffs. A temporary reprieve relieved markets, but increased tariffs on China led to market volatility. Traders readjusted positions, and European currencies gained strength, reflecting ongoing trade tensions and economic uncertainty.

The U.S. dollar experienced a decline against major currencies on Thursday, reaching a ten-year low against the resilient Swiss franc. This fluctuation came as markets processed President Donald Trump's sudden tariff policy reversal. On Wednesday, Trump surprised financial markets by rescinding tariffs implemented on trading partners just 24 hours prior, instead opting for a 90-day freeze on 'Liberation Day' tariffs while maintaining a 10% duty on most nations.

Immediate increases in tariffs on Chinese imports to 125%, following Beijing's response to past U.S. tariffs, resulted in market turbulence. In response, the U.S. dollar rebounded sharply against traditional safe-havens like the Swiss franc and Japanese yen on Wednesday, prompting a positive reaction from Wall Street's primary stock indexes and offering a brief respite for investors.

Thursday saw traders recalibrating their market positions, causing the dollar to drop 2% against the yen and 3.6% against the Swiss franc. The S&P 500, Dow, and Nasdaq saw notable declines. Despite initial relief from tariff suspensions, markets remain volatile as adjustments continue amid the evolving trade landscape.

(With inputs from agencies.)