After slipping for three consecutive days, the U.S. dollar stabilized Wednesday but remains close to its lowest point in two weeks, supported by improved risk sentiment following the U.S.-Japan trade agreement.
At 04:10 ET (08:10 GMT), the Dollar Index—which measures the greenback against a basket of six currencies—held mostly steady at 97.110, just above its weakest mark since July 10.
Since President Donald Trump announced his “Liberation Day” tariffs on April 2, the index has fallen more than 6%, reflecting growing global trade tensions.
Dollar hovers near lows amid trade optimism
The recent U.S.-Japan trade deal has lifted hopes of avoiding a full-scale global trade war and fueled expectations for additional agreements before upcoming tariff deadlines.
In a Truth Social post, Trump noted, “a tariff rate of 15% was set on imports from Japan, down from the 25% rate that was expected to take effect from August 1,” and added, “the Asian nation will invest $550 billion in the United States.”
Following Trump’s sweeping tariff announcements in April, the dollar has been one of the biggest losers, especially after many duties were delayed or suspended while the administration pursued bilateral deals.
Market focus now shifts to upcoming U.S. housing figures ahead of next week’s Federal Reserve meeting.
“The U.S. focus will be on the June existing home sales release,” ING analysts said in a note. “Some are thinking that the housing sector will be the next shoe to drop in the U.S. slowdown.”
Euro dips slightly before ECB decision
In European markets, EUR/USD edged down 0.1% to 1.1745, dipping slightly but still near a four-year high reached earlier this month.
The euro has rallied over 13% this year as investors sought alternatives to U.S. assets.
The European Central Bank is widely expected to keep rates unchanged on Thursday after eight straight cuts, with the threat of renewed U.S. tariffs looming.
GBP/USD rose 0.2% to 1.3546, buoyed by the U.K.’s recent trade deal with the Trump administration.
Political turmoil weighs on yen
Meanwhile, USD/JPY gained 0.1% to 146.72, with the yen giving back earlier gains made after the U.S.-Japan trade deal amid rising political uncertainty in Japan.
Washington and Tokyo agreed on a broad trade pact including a 15% tariff on Japanese imports, down from the previously proposed 25%.
However, optimism faded after Japan’s Mainichi newspaper reported that Prime Minister Shigeru Ishiba intends to formally resign by the end of August.
This decision follows growing internal criticism after the ruling Liberal Democratic Party’s coalition suffered losses in recent upper house elections.
Elsewhere, AUD/USD climbed 0.5% to 0.6577 and USD/CNY eased 0.2% to 7.1629, as the trade deal sparked broader regional optimism.
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