US dollar tumbles to 14-month low after trade pressures subside

Source Cryptopolitan

The US dollar has hit its lowest point in 14 months, with traders dumping the currency after a rocky week filled with trade threats from Mr. President Donald Trump.

The Bloomberg Dollar Spot Index took a heavy hit, dropping 1.7% since last Friday. This is its sharpest weekly fall since July 2023, when the Federal Reserve ended a prolonged period of monetary tightening.

While the president has consistently threatened major trade partners like Canada and Mexico, actual executive orders to enforce tariffs remain nonexistent. Instead, Trump has instructed the Treasury and Commerce departments to assess trade relations and provide a report by April 1.

Investors brace for a dollar sell-off

Currency traders are now starting to act on what they’ve been predicting for months: the dollar is overvalued and set for a correction.

Matthew Hornbach, Morgan Stanley’s head of macro strategy, said investors were cautious about selling the dollar so early in Trump’s term, unsure whether he would push through tariffs immediately. Now that Trump has held back on action, traders feel freer to move.

“The further we get into President Trump’s second term, the more comfortable investors are becoming with expressing their views. The dollar is rich, interest rates are high, and both are ripe for a correction,” Hornbach said.

The correction has already benefited other major currencies. The British pound surged more than 2.5% against the dollar this week, buoyed by strong manufacturing and services data out of the UK. The euro also had a strong showing, recording its best weekly performance since 2023.

Much of Trump’s trade rhetoric has focused on North American trading partners like Canada and Mexico, leaving the eurozone out of his direct crosshairs — for now.

Meanwhile, Morgan Stanley strategists warn that the tide against the dollar is building. The bank has one of the most bearish outlooks on the greenback among those surveyed by Bloomberg.

“While dollar bulls are loud and active, there’s a quieter but substantial group of investors ready to bet against the currency,” they said.

The data backs up this sentiment. Futures data from the Commodity Futures Trading Commission (CFTC) shows traders holding $34.6 billion worth of bullish dollar positions, the highest since 2019. But with the dollar gauge up just 3% since Trump’s November victory, there are risks of a major reversal.

But the dollar has gained over 2% in the past quarter against currencies like the Mexican peso, Canadian dollar, and Chinese yuan. However, many traders have opted to focus more on Trump’s actions—or lack thereof—rather than his words.

Cryptopolitan Academy: How to Write a Web3 Resume That Lands Interviews - FREE Cheat Sheet

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Natural Gas sinks to pivotal level as China’s demand slumpsNatural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
Author  FXStreet
Jul 01, 2024
Natural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
placeholder
Gold Price Forecast: XAU/USD drifts lower below $2,900 amid profit-takingGold price (XAU/USD) edges lower to near $2,880 due to profit-taking during the early Asian session on Monday.
Author  FXStreet
Yesterday 01: 28
Gold price (XAU/USD) edges lower to near $2,880 due to profit-taking during the early Asian session on Monday.
placeholder
Dogecoin Crash Signal Flashes: Analyst Warns Of A Potential 40% DropDogecoin (DOGE) holders have been put on alert by crypto analyst Ali Martinez (@ali_charts), who shared a chart on Monday highlighting a noteworthy technical setup. According to Martinez, the Market
Author  NewsBTC
17 hours ago
Dogecoin (DOGE) holders have been put on alert by crypto analyst Ali Martinez (@ali_charts), who shared a chart on Monday highlighting a noteworthy technical setup. According to Martinez, the Market
placeholder
Bitcoin Faces Persistent Resistance at $100K, Analyst Eyes Next StepWeeks after hitting an all-time high above $109,000, Bitcoin’s price remains under pressure. It is currently trading below the $100,000 mark, an 11.4% decrease from its peak. The crypto asset’s
Author  NewsBTC
1 hour ago
Weeks after hitting an all-time high above $109,000, Bitcoin’s price remains under pressure. It is currently trading below the $100,000 mark, an 11.4% decrease from its peak. The crypto asset’s
placeholder
Amazon, Microsoft, Alphabet, and Meta Just Gave Nvidia Great News. But Does That Make The Stock A Buy Before Feb. 26?The stock market appears to be in the middle of quite the storm as of late. In the final days of January, a Chinese start-up called DeepSeek sent shock waves around the world after
Author  The Motley Fool
1 hour ago
The stock market appears to be in the middle of quite the storm as of late. In the final days of January, a Chinese start-up called DeepSeek sent shock waves around the world after
goTop
quote