Dollar Slumps as Tariff Uncertainty Lifts Euro, Yen, and Swiss Franc

The U.S. dollar held steady on Wednesday but is set for its worst monthly decline since November 2022, falling sharply amid rising global uncertainty over President Donald Trump’s volatile trade policies. Retreats from initial sweeping tariff plans have rattled investor confidence, driving capital flows into traditionally safer currencies such as the euro, yen, and Swiss franc.

Trump’s administration softened auto tariffs this week by offering credits and easing levies on raw materials. Additionally, it touted a trade agreement with an unnamed partner, with Treasury Secretary Scott Bessent hinting at pending deals with India and South Korea. Despite these efforts, fears persist that tariffs will hurt U.S. growth, increase inflation, and spike unemployment.

The euro traded at $1.1387, up 5.26% in April—its best month since November 2022. The Swiss franc rose over 7% this month, marking its strongest performance in a decade, while the yen gained more than 5% as investors await Thursday’s Bank of Japan policy meeting.

Markets remain on edge following weak U.S. economic indicators. Job openings fell sharply in March, and consumer confidence dropped to a five-year low in April. The U.S. trade deficit also hit a record, and major corporations like UPS and General Motors have issued negative outlooks, citing rising costs.

Analysts at ING warn that front-loaded imports to avoid tariffs could drag Q1 GDP. Economist David Kohl of Julius Baer expects the Fed to hold rates steady for now but predicts two 50-basis-point cuts in July and September if labor market weakness emerges.

The dollar index hovered near a three-year low at 99.219, down 4.76% in April. Meanwhile, sterling, the Australian dollar, and the New Zealand dollar posted monthly gains of 3.8%, 2%, and 4.4%, respectively.