The U.S. dollar weakened significantly across global currencies on Monday as investors remained cautious about the future direction of U.S. trade policy and prepared for a crucial week filled with economic data. The upcoming releases are expected to shed light on whether President Donald Trump’s trade war is beginning to show negative effects on the domestic economy.
“Today has been characterized by a correlation between the dwindling buck and doubt affecting equities,” explained Juan Perez, director of trading at Monex USA based in Washington. He added, “While earnings will keep markets eager, the main issue remains the lack of faith in having a good economic situation developing in the U.S. as it tries to act unilaterally and use leverage as the world’s largest economy.”
Equity markets reflected this apprehension, with the S&P 500 and Nasdaq both falling. The Dow Jones Industrial Average, however, managed a modest gain.
During afternoon trading, the dollar declined 1.1% against the Japanese yen, reaching 142.10 yen, marking its most substantial daily loss since April 10. Simultaneously, the euro appreciated by 0.5% against the dollar, climbing to $1.1419.
Against the Swiss franc, the dollar was down 0.7%, trading at 0.8205 franc. Earlier in the day, the greenback had actually gained against the franc before reversing course. This trend contributed to the dollar heading for its worst monthly performance since July of the previous year. Investor confidence in U.S. assets has been rattled by Trump’s unpredictable trade maneuvers.
In contrast, the euro was on track for its biggest monthly gain against the dollar in nearly 15 years. Although the dollar had trimmed some of its monthly losses late last week, this partial recovery was fueled by a perceived softening in rhetoric from both the U.S. and China concerning their trade standoff.
Signs of a more conciliatory tone emerged, with the Trump administration indicating it might consider reducing tariffs and China agreeing to exempt some imports from its steep 125% duties. Despite these gestures, significant uncertainties remain.
Trump has insisted that progress is being made in the negotiations and mentioned speaking with Chinese President Xi Jinping. However, Beijing denied that trade talks were ongoing. Moreover, Treasury Secretary Scott Bessent did not confirm on Sunday that tariff discussions were underway.
On Monday, Bessent noted that top U.S. trading allies had submitted “very good” proposals intended to help avoid the imposition of U.S. tariffs. He mentioned that one of the initial agreements could likely be with India.
Regarding China, Bessent stated, “All aspects of government are in contact with China,” emphasizing that the responsibility to ease tensions rested largely on Beijing, as China exports five times more goods to the U.S. than it imports.
Anticipated Economic Reports Ahead
Market participants are also waiting for the release of the April U.S. employment report due on Friday. While job growth is still expected, the pace is anticipated to be markedly slower compared to the previous month.
Federal Reserve policymakers, including Chair Jerome Powell, have suggested they are open to cutting interest rates if economic growth appears threatened. However, they seem inclined to first evaluate the real-world impact of Trump’s tariff policies on key indicators such as inflation and job creation.
Other key data scheduled for release this week includes U.S. first-quarter gross domestic product (GDP) figures and the Fed’s preferred inflation indicator, the core Personal Consumption Expenditures (PCE) index. Across the Atlantic, Europe is also preparing to publish GDP figures and early inflation estimates.
“Data later on may move the buck but for now we see ourselves at the mercy of headlines offering some clue about progress on the trade front,” said Monex’s Juan Perez. He continued, “Long-term planning as well as forecasting navigating through the headache of ever-changing narratives. With ‘Sell USA’ mentality abroad, the dollar is quick to suffer from a sour mood.”
Meanwhile, in Europe, the euro dropped 0.4% against the British pound to 85.03 pence after reports of a widespread power outage affecting large portions of Spain.
Other Global Currency Movements
Canada held its general election on Monday. Although the ruling Liberal Party maintained a narrow lead in traditional opinion polls, it held a more substantial advantage in online prediction markets. Currency volatility in the Canadian dollar appeared muted, with the greenback slipping only 0.1% to C$1.3836.
In Japan, the Bank of Japan is scheduled to decide on monetary policy this Thursday. No change in interest rates is expected, but markets are paying close attention to the bank’s economic outlook and how it plans to respond to a shifting global economic landscape. U.S.-Japan trade talks are also expected to cover currency issues.
Japan’s chief currency official, Atsushi Mimura, on Monday dismissed a report published in the Yomiuri newspaper that Bessent had commented during a meeting with Japanese officials that a weak dollar and strong yen were favorable outcomes.
Currency Snapshot as of April 28 at 07:37 p.m. GMT
The dollar index stood at 98.941, down from the previous close of 99.729, registering a 0.78% daily decline and an 8.80% year-to-date decrease. The euro-dollar exchange rate rose to $1.1422 from $1.1362, gaining 0.52% for the day and 10.32% year-to-date.
The dollar-yen exchange fell to 142.04 from 143.65, a 1.11% drop for the day and a 9.72% year-to-date decrease. The euro-yen pair was at 162.27, down 0.6% from the previous session.
Against the Swiss franc, the dollar fell to 0.8206 from 0.8266, a 0.71% decrease for the day. The pound strengthened against the dollar, reaching $1.3429, up 0.9%.
The dollar also declined slightly against the Canadian dollar, falling to 1.3832 from 1.3851, while the Australian dollar rose to 0.6429 from 0.6397, a 0.52% increase.
Other notable currency movements included the euro-franc falling to 0.9371, the euro-sterling dropping to 0.8503, and the New Zealand dollar edging up to 0.5971. The dollar also dropped against Scandinavian currencies, including the Norwegian krone and Swedish krona.
In conclusion, a mix of trade policy ambiguity, geopolitical tension, and anticipation over key economic reports contributed to the dollar’s broad decline. While investors seek more clarity, currency markets remain highly reactive to even small shifts in diplomatic or economic signaling.
