The U.S. dollar eased on Thursday, pulling back slightly from a two-week high against major currencies as traders appeared unfazed by President Donald Trump’s latest tariff announcements.
By 04:20 ET (08:20 GMT), the Dollar Index—which measures the greenback’s value against a basket of six currencies—slid 0.1% to 97.107, after reaching its highest level since June 25 in the previous session.
Dollar pulls back from highs
Overnight, President Trump once again stirred trade tensions by sending letters to seven additional countries outlining new U.S. tariff rates, adding to 14 other letters sent earlier this week.
He also declared a 50% tariff on imports from Brazil following a dispute with Brazilian President Luiz Inacio Lula da Silva, and confirmed a 50% tariff on copper imports, fulfilling his earlier threats.
Despite these moves, currency markets have shown only muted reactions, apart from the Brazilian real, as traders remain hopeful for deals with major partners such as India and the European Union.
“The dollar is slightly offered this morning, but remains largely a bystander amid tariff chaos,” ING analysts noted.
They added, “The question is what needs to happen for the dollar to take Trump’s tariff manoeuvres seriously. Our perception is that the bar is high for now, but should get lower as we approach the 1 August deadline. If by then trade negotiations with large U.S. partners aren’t at an advanced stage, it will be harder to ignore the higher U.S. tariff rate.”
Economic data continues to be a key driver for the dollar, particularly after the minutes from the last Federal Reserve meeting showed that the cautious, somewhat hawkish sentiment still dominates the FOMC.
Later in the session, jobless claims will be closely watched, and ING added, “the potential FX impact of next week’s CPI figures still looks much bigger than trade news.”
Euro volatility remains subdued
In Europe, EUR/USD inched up 0.1% to 1.1731, with volatility easing amid optimism that a trade deal between the EU and the U.S. may soon be finalized.
EU trade commissioner Maros Sefcovic said on Wednesday that substantial progress had been made on a trade framework and a deal could be reached within days.
“A U.S.-EU trade deal seems imminent, with reports suggesting the European Commission’s interim draft should include asymmetrical tariffs on EU products (likely the 10% base tariff), effectively choosing a de-escalation path. That is likely priced in by now, and barring major surprises in the details of the deal, EUR/USD may stay attached to the 1.170-1.175 area for now,” ING commented.
GBP/USD climbed 0.2% to 1.3608, supported by the UK’s existing trade agreement with the Trump administration.
Brazilian real plunges on tariff threat
In Asia, USD/JPY dipped slightly to 146.29, and USD/CNY edged down 0.1% to 7.1775, with most regional currencies muted as markets digested Trump’s new tariff measures.
USD/BRL surged 2.4% to 5.5766 following Trump’s announcement of a 50% tariff on all Brazilian imports.
These tariffs, set to take effect August 1, partly respond to Trump’s frustration over what he sees as mistreatment of former Brazilian President Jair Bolsonaro, a close political ally.
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