Dollar Suffers Steepest One-Day Fall Since April

The U.S. dollar recorded its worst single-day performance in nearly a year on Tuesday, sliding roughly 1.3% and sinking to its weakest level since February 2022, after President Donald Trump indicated he was comfortable with the currency’s recent decline.

The move marked the sharpest daily drop since April 10, 2025, a session that had been driven by escalating trade tensions and fears of sweeping tariffs. Currency markets reacted swiftly to Trump’s comments, interpreting them as a signal that the administration is not inclined to defend the dollar’s current level.

Over the past 12 months, the greenback has fallen approximately 10%, reflecting a combination of policy uncertainty, shifting interest-rate expectations, and growing concerns over global trade dynamics.

Trump Signals Approval of a Softer Dollar

Speaking to reporters during a visit to Iowa, where he was highlighting his economic agenda, Trump was asked whether he believed the dollar had weakened too much.

“I think it’s great,” he said, adding that the softer currency is helping drive business activity in the United States.

Trump also pointed to past frustrations with Japan and China, recalling how he frequently accused both countries of deliberately weakening their currencies to gain a competitive advantage in global trade. He argued that a strong dollar had previously made it harder for U.S. exporters to compete, while foreign rivals benefited from cheaper currencies.

His remarks reinforced the view among investors that the administration may tolerate — or even favor — a weaker dollar to support exports and domestic manufacturing.

Dollar Index Slides as Markets Reprice Currency Risk

The U.S. Dollar Index, which measures the greenback against six major currencies including the euro, yen, and pound, posted its biggest one-day decline since April and extended its recent downtrend.

Tuesday’s fall mirrors the sharp selloff seen last April, when the index dropped nearly 2% amid mounting trade disputes and U.S. threats to impose tariffs as high as 145% on Chinese imports. That earlier episode also triggered heavy losses across equity markets, with the S&P 500 falling 3.5% and the Nasdaq Composite dropping 4.3% in a single session.

This time, the catalyst was presidential rhetoric rather than immediate tariff action, but the market response highlighted how sensitive currency traders remain to signals from Washington.

The dollar’s slide to levels not seen since early 2022 underscores growing skepticism about near-term U.S. currency strength, especially as investors reassess fiscal policy, trade relations, and the trajectory of interest rates.

Broader Implications for Markets and the Economy

A weaker dollar can provide a boost to U.S. exporters by making American goods more competitive overseas, while also supporting multinational companies that generate significant revenue abroad. However, it can raise import costs and add to inflationary pressure, particularly for energy and consumer goods priced in foreign currencies.

Currency strategists say Trump’s comments add another layer of uncertainty at a time when global markets are already navigating volatile geopolitics, shifting central bank policies, and ongoing trade frictions.

With the dollar now at multi-year lows, analysts expect increased volatility across foreign exchange markets, especially if further statements from U.S. officials reinforce the perception that Washington is comfortable with continued depreciation.

Investors Brace for Continued Currency Swings

Market participants are now watching closely for signals from the Federal Reserve and the White House to gauge whether the dollar’s decline will accelerate or stabilize. Some analysts believe the greenback could face additional pressure if trade tensions re-emerge or if expectations for U.S. rate cuts strengthen later this year.

For now, Trump’s public endorsement of a weaker dollar has sent a clear message to markets: currency strength is not a top priority for the administration.

As global investors adjust their positions, the dollar’s sharp slide serves as a reminder of how quickly sentiment can shift when politics and economics collide.

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