On Tuesday, the U.S. dollar dropped to its lowest level in six weeks, reflecting renewed fears that former President Trump’s trade policies are weighing heavily on the American economy.
The dollar index remained largely flat after touching 98.58, its weakest point since late April. Against the Japanese yen, the greenback declined to 142.71, nearing a one-week low. Meanwhile, the euro traded around $1.1446, following a brief rally to $1.1454—its strongest showing in over a month.
Upcoming economic reports on manufacturing output and job creation, expected later this week, may offer more clarity on the toll the ongoing trade war is taking. While global stock markets have shown signs of recovery, the dollar’s downward trend has continued.
On Wednesday, the U.S. will double tariffs on imported steel and aluminum to 50%, a move expected to further strain international trade ties. The same day marks the deadline for other nations to present updated proposals in their ongoing negotiations with Washington.
According to Rodrigo Catril, senior foreign-exchange strategist at National Australia Bank, “This whole situation suggests that trade tensions remain unresolved, and we’ve seen the dollar come under broad pressure.” He also noted that both the Australian and New Zealand dollars have shown resilience.
The value of the New Zealand dollar increased by 0.1% to $0.6045, a new high for 2025. The Australian dollar remained stable at $0.64951.
Investors are now awaiting the European Central Bank’s (ECB) upcoming meeting later this week, which is expected to include an announcement on interest rates along with updated guidance on future monetary policy.
On Monday, the dollar index dropped by 0.8% following reports that U.S. May saw a decline in industrial activity for the third consecutive month, partly due to supplier delivery delays brought on by tariffs. Although the dollar saw a short-lived rebound last week—rising 0.3% as trade discussions with the European Union resumed—its overall trend remains weak.
Meanwhile, a ruling by the U.S. trade court initially blocked most of Trump’s proposed tariffs, only for the decision to be overturned the next day by an appeals court. In response, the government said that it will look into further enforcement options if necessary.
Growing concerns about the U.S. government’s fiscal health have further dampened investor confidence. This has contributed to a broader “sell America” sentiment, leading to declines in both U.S. equities and Treasury bond values in recent months.
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