How Trump’s Tariffs Are Shaking the Currency Markets
[Image: AFP]
President Donald Trump’s sweeping tariff announcements have caused immediate tremors across global markets—particularly within the foreign exchange (FX) space. As fears of a prolonged trade war escalate, investors are rapidly rotating out of the U.S. dollar, triggering notable movements in Asian and emerging market currencies.
[Image: AFP]
A Broad Decline in the U.S. Dollar
The U.S. Dollar Index (DXY) fell below the key 100 level for the first time since July 2023, signifying a growing lack of confidence in U.S. assets. Investors have fled toward safe-haven alternatives including the Swiss franc, Japanese yen, euro, and gold—assets traditionally favored during times of geopolitical instability and risk aversion. As the dollar weakened, several Asian currencies saw significant upward movement.
- Singapore Dollar (SGD)
Five-month high at 50 basis points, expecting an ease on monetary policy by the Monetary Authority of Singapore.
- Malaysian Ringgit (MYR)
Appreciated by 0.7%, reflecting better clarity on fiscal and trade outlook.
- The Taiwanese Dollar (TWD)
Six-week high at 0.031, buoyed by optimism that Taiwan will be part of early negotiations with the U.S.
- South Korean Won (KRW)
Edged higher at 0.00070 despite broader market jitters.
For traders and investors, these movements represent both opportunity and risk. Here’s how you can approach the current environment:
- Watch Central Bank Policy. A weaker dollar provides emerging market central banks more policy flexibility. Monitor their rate decisions for potential FX volatility.
- Look into USD/SGD, USD/MYR, and USD/TWD for short-term sell-side setups.
- Use Technical Analysis as patterns on daily charts suggest support levels are breaking on several USD pairs, offering short-term opportunities.
- Consider Safe Havens while the dollar weakens. CHF/JPY cross pairs may gain popularity as havens.
[Image: StockSnap – Pixabay]
Conclusion
As Trump’s unpredictable tariff strategy unfolds, currency markets will remain volatile. Traders must stay agile and closely track geopolitical headlines, central bank signals, and technical levels.
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