Tariff Tango: U.S. Dollar Surges Amid Policy Shifts

The U.S. dollar strengthened against safe-haven currencies following President Trump's 90-day tariff pause announcement. However, Trump's tariff hikes on Chinese goods intensified trade tensions. The announcement spiked Wall Street indexes and fluctuated Treasury yields. Despite uncertainty, markets rallied on perceived positive moves, questioning the enduring impact on the U.S. dollar.

The U.S. dollar made gains against safe-haven currencies such as the yen and Swiss franc on Wednesday after President Donald Trump announced a temporary pause on new tariffs. Despite this move, he increased tariffs on Chinese goods, heightening trade tensions with Beijing.

This policy announcement reversed the dollar's earlier session weakness, especially against its peers, as the 'reciprocal' tariffs on multiple countries—including significant duties on Chinese goods—took effect. China responded quickly with tariffs on U.S. goods, while the EU approved counter-tariffs.

Markets reacted positively; U.S. equities surged with major indexes climbing significantly. The dollar also rose against the yen and Swiss franc, but skepticism remains about the policy's effectiveness and the long-term impact on the currency's strength.

(With inputs from agencies.)