Trade Tensions: U.S. Dollar Sinks Amid Tariff Fallout

The U.S. dollar fell sharply as President Trump's new tariff measures sparked turmoil in financial markets. Safe-haven currencies like the yen gained strength, while traders adjusted their interest rate expectations, anticipating multiple rate cuts by the Federal Reserve. Stocks plunged, and investors sought refuge in bonds and gold to mitigate risk.

The U.S. dollar experienced significant losses on Friday, with the yen strengthening, as traders assessed the consequences of President Trump's aggressive tariff strategy.

These measures increased the likelihood of four interest rate cuts by the Federal Reserve this year, while the Bank of Japan is expected to maintain steady rates. Stock markets suffered substantial losses, prompting investors to turn to safer assets like gold and bonds, fearing that a trade war could slow global growth and fuel inflation.

The dollar's downturn followed diminished optimism over Trump's policies as concern over trade barriers grew. The dollar index suffered its most significant drop since November 2022, and the dollar weakened further against major currencies as markets braced for a possible economic slowdown.

(With inputs from agencies.)