The U.S. dollar dipped modestly on Thursday, pulling back from a two-week high versus major currencies as traders appeared to shrug off President Donald Trump’s latest tariff announcements.
At 04:20 ET (08:20 GMT), the Dollar Index—which gauges the greenback against six other currencies—fell 0.1% to 97.107, having touched its highest level since June 25 in the prior session.
Dollar eases from recent peaks
President Trump reignited trade tensions overnight by dispatching letters imposing new U.S. tariffs on seven additional countries, adding to the 14 nations targeted earlier this week.
He also declared a 50% tariff on Brazilian imports following a public spat with Brazil’s President Luiz Inacio Lula da Silva, and confirmed a 50% tariff on copper imports, fulfilling earlier threats.
However, currency markets showed limited reaction beyond the Brazilian real, with traders still anticipating trade agreements with key economies like India and the European Union.
“The dollar is slightly offered this morning, but remains largely a bystander amid tariff chaos,” ING analysts commented.
They added, “The question is what needs to happen for the dollar to take Trump’s tariff manoeuvres seriously. Our perception is that the bar is high for now, but should get lower as we approach the 1 August deadline. If by then trade negotiations with large U.S. partners aren’t at an advanced stage, it will be harder to ignore the higher U.S. tariff rate.”
Market focus remains on economic data, especially after the latest Federal Reserve meeting minutes confirmed a cautious but hawkish stance within the FOMC.
Jobless claims due later will attract attention, while ING noted that “the potential FX impact of next week’s CPI figures still looks much bigger than trade news.”
Euro shows calm amid trade deal hopes
The euro gained 0.1% to 1.1731 against the dollar as volatility eased on hopes of an impending trade agreement between the U.S. and the EU.
Maros Sefcovic, the EU’s trade chief, said Wednesday that good progress has been made on a trade framework and a deal could be finalized soon.
“A U.S.-EU trade deal seems imminent, with reports suggesting the European Commission’s interim draft should include asymmetrical tariffs on EU products (likely the 10% base tariff), effectively choosing a de-escalation path. That is likely priced in by now, and barring major surprises in the details of the deal, EUR/USD may stay attached to the 1.170-1.175 area for now,” ING said.
Meanwhile, GBP/USD rose 0.2% to 1.3608, underpinned by the UK’s existing trade agreement with the Trump administration.
Brazilian real plunges after tariff announcement
In Asia, USD/JPY fell slightly to 146.29, and USD/CNY slipped 0.1% to 7.1775, with most Asian currencies largely stable amid renewed tariff concerns.
USD/BRL surged 2.4% to 5.5766 after Trump’s announcement of a 50% tariff on all imports from Brazil.
The tariffs, set to come into force on August 1, partly reflect Trump’s displeasure over the treatment of his political ally, former Brazilian President Jair Bolsonaro.
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