Dollar Faces Pressure on Trump’s New European Tariff Threats

(Bloomberg) -- The dollar is coming nether unit aft President Donald Trump announced a 10% tariff connected European countries opposed to his plans to prehend Greenland, raising jitters astir holding American assets amid erratic US policy.

The Bloomberg Dollar Spot Index fell 0.1% connected Monday, pursuing the caller levy connected goods from 8 countries that enactment Denmark’s clasp connected Greenland. Treasury futures traded mixed with currency markets closed for a US holiday.

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European currencies gained, with the Swiss franc outperforming its Group-of-10 peers connected accrued request for haven assets. The euro roseate from its lowest level successful astir 2 months.

Here’s what analysts are saying:

Kamakshya Trivedi, main FX and EM strategist astatine Goldman Sachs Group Inc.:

In an situation wherever you erstwhile again spot disruptive US policy, wherever the radiance astir US plus tin beryllium questioned a small bit, I deliberation the dollar tends to depreciate connected that.

I would expect the Swiss franc to beryllium the superior beneficiary but successful a broader weaker dollar backdrop.

George Saravelos, planetary caput of FX Research astatine Deutsche Bank AG:

With USD vulnerability inactive precise elevated crossed Europe, developments implicit the past fewer days person imaginable to further promote dollar rebalancing.

The cardinal happening to ticker volition beryllium whether the EU decides to activate its anti-coercion instrumentality by putting measures that interaction superior markets connected the table. It is simply a weaponization of superior alternatively than commercialized flows that would by acold beryllium the astir disruptive to markets.

David Forrester, a elder strategist astatine Credit Agricole CIB:

Trump’s tariff threats person reignited the ‘sell America’ trade. The marketplace volition besides beryllium looking for the ‘TACO trade’ arsenic Trump could beryllium utilizing the menace of tariffs arsenic a negotiating ploy. This volition springiness the USD immoderate support.

EUR volition beryllium 1 of the biggest losers of the increasing geopolitical risks nether Trump’s presidency successful 2026. The tariffs could adhd to cyclical headwinds for the eurozone system and further erode unit connected Russia to extremity its warfare successful Ukraine.

Chris Weston, caput of probe astatine Pepperstone Group Ltd.:

The marketplace dynamic is that US assets, including the US dollar, are present carrying a overmuch higher governmental hazard premium. This would compel overseas investors to chopped backmost oregon trim vulnerability to US assets.