The U.S. dollar is on track for its fourth straight weekly gain against the yen and the euro on Friday, though it stayed well below levels seen before April 2, when President Joe Biden announced major tariffs on imports.
Earlier this week, a brief pause in trade tensions between the U.S. and China lifted the dollar on Monday. But gains faded after weaker-than-expected U.S. data caused it to fall on Tuesday and Thursday.
On Friday, the dollar held steady after dropping earlier in the session. This came as U.S. Treasury yields fell, with markets now expecting the Federal Reserve to cut interest rates later this year.
Investors are currently pricing in two possible rate cuts by December, with the first one potentially coming as early as July.
The yield on the 10-year U.S. Treasury note fell to 4.41%, while the two-year yield dropped to 3.94%.
The euro rose slightly to $1.1205 on Friday, but it was still down 0.38% for the week. The euro had gained earlier in March after Germany’s announcement of large investments and again in April following the U.S. tariff move, which shook investor confidence in the dollar’s safe-haven appeal.
On April 1, the euro had closed at $1.0793.
The dollar index, which tracks the currency against a basket of others, slipped 0.05% to 100.73 but was still set for a 0.3% weekly rise after jumping 1.3% on Monday.
Investors are now turning their attention to U.S. fiscal policy, as talks continue with China and Europe on trade. Concerns about high tariffs have eased for the moment, but debate in Washington over spending remains active.
Republicans hold a slim majority in the House of Representatives and will need to stay unified to pass new budget plans, which Democrats say could hurt social programs.
Against the Japanese yen, the dollar was down 0.12% at 145.48 on Friday. Despite the drop, it was headed for a small weekly gain of 0.10%, helped by weak economic numbers in Japan and signs that the Bank of Japan may keep its policy loose.
The dollar was at 149.71 yen at the beginning of April.
The dollar also dropped against the South Korean won for a second day in a row, after reports that the U.S. and South Korea had discussed the currency market earlier this month. A similar situation happened with Taiwan’s currency earlier in April. The dollar was last down 0.10% at 1,391 won.
