The U.S. dollar is facing significant pressure this week, driven down by renewed tariff threats and ongoing fiscal challenges.
For anyone watching the forex market, understanding this shift is crucial as it directly impacts major currency pairs.
This market update will break down why the dollar is weakening, how other FX majors are reacting, and what key factors could influence the markets next.
Trump’s Tariff Threats Weigh on USD
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Trump on Friday proposed a 50% tariff on EU imports and warned of tariffs on Apple iPhones and Samsung products not made in the US.
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Although he agreed to delay the EU tariff deadline to July 9, the USD Index dropped to 98.80, its lowest in a month, and down 2% on the week.
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Market confidence remains shaky amid Senator Ron Johnson’s threat to stall Trump’s tax bill over deficit concerns.
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FX Majors React to Dollar Weakness
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EUR/USD climbs above 1.1400, buoyed by USD weakness; eyes Lagarde’s ECB speech later today.
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GBP/USD extends gains, trading above 1.3550, its highest since Feb 2022.
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USD/JPY consolidates quietly below 143.00 after last week’s 2% drop.
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USD/CAD dips below 1.3700 for the first time in 2025, continuing last week’s bearish momentum.
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AUD/USD jumps to a fresh 2025 high above 0.6500, holding bullish momentum.
Gold Retreats After Safe-Haven Surge
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Gold surged last week on risk aversion but is pulling back below $3,350 early Monday.
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Still supported longer-term by fiscal uncertainty and geopolitical risks.
Markets Closed Today in the U.S.
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US stock and bond markets are closed for Memorial Day.
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Expect lower liquidity and thinner volumes across global markets.
Trade245 Takeaway
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DXY in freefall as Trump’s tariff rhetoric and fiscal discord trigger sell-offs.
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Watch for volatility return Tuesday as US markets reopen.
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Key events ahead: ECB speech today, followed by inflation data mid-week.
