The U.S. dollar steadied on Wednesday following three days of declines but remains close to its lowest level in two weeks, buoyed by renewed investor confidence stemming from the recently announced U.S.-Japan trade agreement.
At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six currencies, was steady around 97.110, just above its July 10 low.
Since President Donald Trump unveiled his “Liberation Day” tariff plan on April 2, the dollar has dropped more than 6%, reflecting mounting global trade concerns.
Trade Deal Boosts Dollar Sentiment
The U.S.-Japan trade pact has eased fears of an escalating global trade war and sparked hopes for further trade agreements ahead of the August 1 tariff deadline.
Trump posted on Truth Social: “a tariff rate of 15% was set on imports from Japan, down from the 25% rate that was expected to take effect from August 1,” and added, “the Asian nation will invest $550 billion in the United States.”
The dollar has been among the biggest casualties since the sweeping tariff announcements in April, especially after many planned duties were postponed or canceled in favor of bilateral deals.
Investors now turn their attention to upcoming U.S. housing data releases ahead of the Federal Reserve’s policy meeting next week.
“The U.S. focus will be on the June existing home sales release,” said ING analysts in a research note. “Some are thinking that the housing sector will be the next shoe to drop in the U.S. slowdown.”
Euro Weakens Slightly Ahead of ECB Decision
In Europe, EUR/USD edged down by 0.1% to 1.1745, dipping slightly but still near its four-year high hit earlier this month.
The euro has surged over 13% this year as investors sought refuge from U.S. assets.
The European Central Bank is expected to hold interest rates steady on Thursday after eight consecutive cuts, amid the risk of renewed U.S. tariffs.
GBP/USD rose 0.2% to 1.3546, supported by the U.K.’s recently signed trade deal with the Trump administration.
Political Uncertainty Pressures Yen
USD/JPY climbed 0.1% to 146.72, as the yen retreated from earlier gains linked to the trade deal amid growing political instability in Japan.
Washington and Tokyo reached a comprehensive trade agreement, imposing a 15% tariff on Japanese imports, down from the previously proposed 25%.
However, the positive momentum faded after Japan’s Mainichi newspaper reported that Prime Minister Shigeru Ishiba plans to resign formally by the end of August.
This follows criticism within his Liberal Democratic Party after losses in the recent upper house elections.
Elsewhere in Asia, AUD/USD gained 0.5% to 0.6577, while USD/CNY eased 0.2% to 7.1629, as optimism from the trade deal spread through the region.
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