📌 The U.S. dollar fell to a 14-month low after trade pressure eased
– Permanent link for this post:The U.S. dollar hit a 14-month low and fell 1.7% this week as traders reacted to President Trump’s softening stance on tariffs.
President Trump’s threats to Canada, Mexico and China rattled markets, but the actual tariff order has yet to be signed. Investors’ selling of the dollar accelerated, favoring the pound and the euro. The dollar hit a 14-month low. Traders are dumping currencies after a tumultuous week filled with trade threats from President Donald Trump. The Bloomberg Dollar Spot Index fell 1.7 percent from last Friday. This is the sharpest weekly drop since July 2023, when the U.S. Federal Reserve ended a long period of monetary tightening.
the President has consistently threatened major trading partners such as Canada and Mexico, but has yet to issue an actual executive order imposing tariffs. Instead, President Trump has directed the Treasury and Commerce departments to assess trade relations and report back by April 1.
Currency traders are starting to do what they’ve been predicting for months.
the head of macro strategy at Morgan Stanley, Matthew Hornback, says that at the beginning of Trump’s presidency, investors were cautious about selling the dollar because they weren’t sure he would impose tariffs anytime soon. Now that President Trump is refraining from action, traders are feeling freer.
the further into Trump’s second term, the more relaxed investors’ views become. The dollar is rich, interest rates are high, and both are ripe for a correction, Hornbeck says. The British pound has gained more than 2.5 percent against the dollar this week. The euro also held steady, hitting its highest weekly level since 2023.
most of Trump’s trade rhetoric has been directed at North American trading partners like Canada and Mexico, so the eurozone remains off his direct target for now.
Morgan Stanley strategists, meanwhile, have warned of a growing trend of dollar weakness. Morgan Stanley has the most bearish outlook for the dollar in a Bloomberg survey. “Dollar bulls are loud and active, but there is a quiet but active group of investors willing to bet against the dollar. “
data confirms this sentiment. According to the Commodity Futures Trading Commission (CFTC), traders hold $34.6 billion in bullish positions against the dollar, the highest since 2019. However, the dollar has risen just 3% since Trump’s November victory and is at risk of a major reversal.