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Dollar Struggles as Trade Uncertainty Weighs on Markets

Dollar Struggles as Trade Uncertainty Weighs on Markets. Source: Image by Brett Hondow from Pixabay

The U.S. dollar wavered Thursday, capping a turbulent week marked by initial optimism over a U.S.-China tariff truce that quickly gave way to renewed caution over global trade negotiations. The South Korean won steadied after sharp fluctuations, driven by reports of recent U.S.-Korea currency discussions.

According to Bloomberg, Washington is not actively seeking a weaker dollar in current tariff talks, easing some market tension. However, investor concerns persist over the possibility of a softer dollar being used as leverage in future trade deals. The won’s recent volatility mirrored Taiwan’s earlier surge following the conclusion of U.S.-Taiwan trade talks, fueling speculation about quiet agreements to weaken the greenback.

Kieran Williams of InTouch Capital Markets noted that speculation over currency negotiations and a potentially weaker dollar under the Trump administration have supported won sentiment. Still, broader domestic and global uncertainty could limit further gains.

The dollar has shown mixed performance—rebounding slightly against the euro, pound, and yen, while weakening versus several emerging market currencies. The won last traded at 1,410.70 per dollar, gaining 0.6% in the prior session. Meanwhile, the Mexican peso hovered near a seven-month high at 19.38, and the Japanese yen edged up to 146.48, remaining close to a one-month low.

The dollar index held steady around 101, poised for its fourth consecutive weekly gain. Market attention now turns to U.S. retail sales data and more clarity on trade deal developments following the 90-day pause in U.S.-China tariffs announced Monday.

Kristina Clifton from the Commonwealth Bank of Australia predicts further upside for the dollar in the near term, expecting a 2%–3% increase as markets reassess global economic conditions. She anticipates the euro, pound, and yen will bear the brunt of this rebound.

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