The U.S. dollar weakened on Tuesday, while the euro gained as stock markets in Asia and Europe saw a rebound, driven by hopes that U.S. President Donald Trump may engage in negotiations over the tariffs that have disrupted markets for several days.
The Japanese yen and Swiss franc rose, indicating continued demand for safe-haven assets as concerns about a potential global recession persist.
The euro was up 0.3% at $1.0936, reversing earlier gains of more than 0.7% after two days of declines. Other currencies, including the British pound and Australian dollar, also recovered, rising 0.3% and 1% respectively after recent losses.
Market sentiment improved amid signs that the Trump administration may be open to negotiating tariff reductions. U.S. Treasury Secretary Scott Bessent expressed hope that ongoing discussions would lead to lower levies, while Japan sent a team to begin talks, boosting Japanese equities.
Despite these positive developments, tensions remained, particularly with China. Beijing criticized U.S. tariff threats, calling them “blackmail,” and vowed to continue its retaliatory measures. Meanwhile, the European Union proposed 25% counter-tariffs on certain U.S. goods.
The dollar lost 0.6% against the Japanese yen, reaching 146.95 yen, its lowest point in six months. It also fell 0.7% against the Swiss franc, leading the U.S. dollar index, which tracks the currency against six major peers, to decline by 0.3% to 103.12.
The index has fallen about 0.7% since Trump’s tariff announcement on April 2, as investors weigh the impact of the trade war on the U.S. economy.
In China, the yuan dropped to its weakest level since 2023, following the central bank’s decision to loosen its control over the currency in an attempt to mitigate the export impact of the tariffs. This move has raised speculation that China might allow a more significant devaluation of the yuan to offset the trade war’s negative effects.
