The greenback climbed the most against the yen and Swiss franc as a rise in US stock futures damped demand for haven assets. The dollar climbed as much as 1% versus both currencies to around 143.00 yen and 82.69 centimes, respectively.
Some technical indicators and market positioning had suggested an overshooting of bearish dollar bets. The US currency fell to the lowest since December 2023 this week after Trump’s threat to fire Powell and the risk of a US recession fuelled a “sell America” trade.
“The dollar is rallying on Bessent’s China comments and news of Trump not looking to remove Powell — all great for risk sentiment on US assets,” said Billy Leung, investment strategist at Global X ETFs. “There were good bites on both equities and dollar yesterday too but note that it was just a retracement from the day before when the greenback was heavily sold.”
A top forecaster, Valentin Marinov, said the dollar’s slump will likely ease this quarter, even as the global trade war has rocked its haven status and led to its worst annual start in at least two decades.
Trump’s move to pause some levies will help calm market worries around US growth and slow the exodus of capital from American markets, said Credit Agricole’s head FX strategist — the most-accurate predictor of major currencies in the first quarter, according to a Bloomberg ranking.
“The market continues to be news driven,” wrote Kathleen Brooks, research director at XTB, in a note. “There could be growing optimism that the US financial system is stepping back from the cliff edge, as we move into the middle of the week.”
