Dollar's Safe-Haven Role Reaffirmed Amid Tariff Uncertainties

The dollar steadied after a dip to a two-month low, amid tariff tensions with Mexico and Canada, fueling safe-haven demand. Trump's comments bolstered stability as economic data weakened. Euro and pound remain high; yen steady on rate hike bets. Tariffs leave risk sentiment fragile.

The dollar experienced stability on Tuesday after previously plunging to its lowest level in over two months against major currencies. This shift followed U.S. President Donald Trump's statement regarding the implementation of tariffs on Mexico and Canada, which prompted a move towards safe-haven assets.

As tariff deadlines loom, Trump's assertions led to a rush towards safety assets such as gold and U.S. Treasuries, offering support to a dollar that has recently declined by about 3% from its January peak. This decline was spurred by weaker U.S. economic data, raising concerns over growth prospects.

The euro dropped slightly to $1.04672, just off its one-month high post-German elections, while the pound dipped to $1.2618. Meanwhile, the Japanese yen remained steady, bolstered by potential rate hikes from the Bank of Japan, impacting the dollar index as tariff deadlines draw near.