The U.S. dollar weakened on Monday, as ongoing uncertainty over the Trump administration’s trade policies continued to undermine investor confidence in the world’s reserve currency.
As of 04:35 ET (08:35 GMT), the U.S. Dollar Index—which measures the greenback against a basket of six major currencies—fell 0.7% to 99.239, hovering near a three-year low.
Dollar Drops as Trade Confusion Deepens
Late Friday, the White House announced a temporary exemption on tariffs for smartphones, computers, and other electronics. However, President Trump indicated that this relief would be short-lived and hinted at plans to introduce new tariffs on imported semiconductors within the coming week.
“It’s fair to call U.S. tariff policy ‘chaotic,’ as most would agree,” analysts at ING commented. “Markets are now bracing for Washington to potentially target the semiconductor and pharmaceutical sectors next.”
As investors grow increasingly skeptical about the narrative of U.S. economic exceptionalism, the dollar’s position as the global reserve currency is facing growing scrutiny.
“There was clear evidence of the buy-side leading dollar selling last week, which was confirmed by CFTC futures data on Friday,” ING noted. “The DXY inflicted significant technical damage on long-term charts, and we expect dollar sellers to reemerge if the index revisits the 100.50–100.75 area.”
EUR/USD Holds Firm Ahead of ECB Meeting
In Europe, EUR/USD rose 0.4% to 1.1400, trading close to Friday’s three-year high as traders shifted into the euro amid dollar weakness.
“EUR/USD broke out of a bear trend that had largely contained price action since 2008,” ING noted.
All eyes are now on this week’s European Central Bank (ECB) meeting, where policymakers face the dual challenge of renewed economic pressure from trade tensions and a surging euro.
“The ECB likely won’t welcome the euro’s recent strength, especially as the trade-weighted euro reaches multi-decade highs,” ING said. “Yet, the euro’s safe-haven appeal and deep liquidity offer stability amid global volatility.”
GBP and JPY Gain on Dollar Weakness and Safe-Haven Demand
GBP/USD climbed 0.8% to 1.3184, as sterling benefited from the dollar’s pullback. However, key U.K. data releases this week—including unemployment and inflation reports—could present downside risks.
“Both data points carry potential downside for sterling,” ING warned.
Meanwhile, USD/JPY fell 0.4% to 142.96, with the yen gaining ground on continued safe-haven demand. The Japanese currency is now near a six-month high as risk aversion lingers.
USD/CNY Edges Higher Despite Weak Yuan Fix
In China, USD/CNY ticked up 0.1% to 7.3003, staying close to the 17-year high reached last week. The People’s Bank of China (PBOC) once again set a weaker midpoint for the yuan—marking the seventh time in eight sessions—as Beijing seeks to soften the economic blow from U.S. tariffs.
Recent trade data showed China’s surplus expanding sharply in March, with exports surging ahead of the expected tariff escalation.
