The US dollar faced heavy selling pressure this week after President Trump imposed a sweeping 145% tariff on Chinese imports, prompting an aggressive 125% retaliatory tariff from China. The escalating trade war sparked a sharp global market sell-off, with the Dollar Index (DXY) dropping below 100 for the first time since July 2023. Investors shifted aggressively into traditional safe havens like the Japanese yen, Swiss franc, and gold, casting further doubt on the USD’s status as a crisis hedge. US equities also took a beating, with the S&P 500 down 3.5% and the NASDAQ sliding 4.3%, while Treasury bonds faced rare selling pressure, raising concerns over the US’s long-term financial stability. Looking ahead, the next week will remain volatile, with ongoing US-China tensions, CPI-miss inspired Fed rate cut speculation, and growing questions over the dollar’s safe-haven appeal expected to weigh heavily on sentiment.

The Canadian dollar surged to a four-month high, buoyed by repatriation flows as investors pulled out of US assets amid intensifying trade tensions. The loonie also found support from Canada’s exemption from Trump’s latest tariffs under USMCA provisions, which boosted investor confidence in the domestic outlook. Despite a drop in oil prices, CAD remained resilient, underpinned by a narrowing rate differential. Looking ahead to the next week, focus turns to the BoC's April 16 meeting, where the policy rate is widely expected to hold at 2.75%, alongside key inflation and jobs data. While external risks remain, especially surrounding US-China trade headlines, the CAD is well-positioned to retain strength, especially if data stays firm and the BoC maintains a measured policy stance.

Expected weekly trading range: 1.37 - 1.41

The euro climbed to fresh highs this week, boosted by temporary relief in global markets after President Trump paused reciprocal tariffs for 90 days, sparking a rally in European equities and strengthening the euro. However, attention now shifts to the ECB, with growing expectations of a 25 bps rate cut at the April 17 meeting, and some forecasts pointing to a deeper 50 bps move, as the central bank responds to trade-driven uncertainty and softening inflation. With Eurozone GDP growth forecast at 0.8% for 2025 and inflation hovering slightly above target, investors will be closely watching monetary policy signals and any shifts in US trade rhetoric during the next week to gauge the sustainability of the euro’s recent gains.

Expected weekly trading range: 1.55 - 1.60

The British pound jumped 1% on April 10, its strongest one-day gain in over a month, driven by technical buying and improved global sentiment following Trump’s temporary tariff adjustments. However, with UK-specific tariffs left unchanged at 10%, the pound lagged other currencies that benefited more directly from reduced trade pressure. Looking ahead, markets will focus on February GDP data, with a modest recovery expected from January’s slight contraction. Meanwhile, the BoE is widely expected to cut rates by 25 bps in May, with Deputy Governor Breeden acknowledging uncertainties around how US tariffs may impact UK inflation and policy. Seasonally, April tends to support GBP but broader trade risks and cautious BoE messaging may cap upside in the near term.

Expected weekly trading range: 1.78 - 1.84

The Japanese yen rallied sharply in the week ending April 11, driven by intensifying global trade tensions and a flight to safety following Trump’s 125% tariff on Chinese imports and a 90-day tariff pause for other nations. As market volatility spiked, investors sought refuge in the yen’s safe-haven status. However, the yen's strength hit Japanese equities hard, with the Nikkei 225 plunging nearly 5%, as a stronger currency eroded the competitiveness of exports and overseas earnings. In response, Vice Finance Minister Atsushi Mimura pledged international cooperation to stabilize markets, signalling potential official concern over currency appreciation. Looking ahead, the yen’s direction will hinge on US-China trade developments, with further escalation likely to sustain safe-haven flows.

Expected weekly trading range: 102.00 - 105.00

The Swiss franc surged to a decade-high against the USD this week as investors sought shelter from escalating global trade tensions. The fresh tariff moves triggered sharp volatility across global markets, driving flows into traditional safe-haven assets like the CHF. The dollar's weakness, fueled by eroding investor confidence and concerns over prolonged trade disputes, further boosted the franc’s strength. However, the rapid appreciation poses challenges for the Swiss economy, particularly as inflation sits at just 0.3%. Next week, the Swiss National Bank faces rising pressure to act, with speculation mounting that it could consider reintroducing negative interest rates to counter deflationary risks and protect exporters. Unless trade tensions ease meaningfully, CHF demand is likely to remain strong, keeping the franc on an upward path.

Expected weekly trading range: 0.58 - 0.60

The Chinese yuan fell to 7.3498 against USD this week, marking its weakest level since December 2007, as escalating US-China trade tensions rattled markets. Trump’s 145% tariff on Chinese imports and China’s 125% retaliation fueled fears of a prolonged trade war, prompting a rush to safe-haven assets and intensifying downward pressure on the yuan. In response, the People’s Bank of China (PBoC) acted swiftly to stem further losses—setting a stronger-than-expected daily midpoint rate and instructing state banks to limit dollar purchases. Next week, the yuan is expected to remain under pressure. While a weaker currency may boost exports, Beijing remains cautious of provoking capital flight or currency manipulation claims, leaving the PBoC walking a fine line between supporting growth and preserving market confidence.

Expected weekly trading range: 5.18 - 5.34

The Indian rupee depreciated significantly this week as global risk aversion surged in response to escalating US-China trade tensions. The USD/INR pair peaked at 86.75 on April 9 before easing by the end of the week, helped by broad US dollar weakness. Contributing to the rupee’s slide was the RBI’s 25 bps rate cut, bringing the repo rate to 6.00%, alongside a shift to an accommodative stance. Meanwhile, foreign investors pulled over $1.3 billion from Indian assets, reflecting broader concerns over trade-related headwinds. Looking ahead, the INR direction hinges on USD trends and global trade developments. While elevated forex reserves at $676.3 billion offer a buffer, ongoing rate cut expectations and external uncertainty may continue to pressure the rupee in the near term.

Expected weekly trading range: 61.10 - 62.90

The Australian dollar staged a sharp recovery this week, with AUD rebounding from a 5-year low of 0.59 to 0.62, marking its strongest gain since late 2022. The turnaround followed initial weakness sparked by US-China trade tensions, which pressured risk-sensitive currencies like the AUD. Later in the week, broad USD weakness and stabilizing sentiment supported the Aussie’s bounce. Meanwhile, speculation swirled around the RBA potentially cutting rates by up to 50 bps, some economists urge caution, suggesting the central bank may wait for key inflation and labour data. For next week, Aussie depends on global trade developments and RBA policy expectations. Commodity price trends, particularly in iron ore and coal, could also offer support if they firm up amid broader volatility.

Expected weekly trading range: 0.86 - 0.88

The New Zealand dollar rebounded sharply last week, with NZD rising from a five-year low of 0.55 on April 9 to 0.58 by April 11, marking a 3.2% weekly gain. The recovery followed an initial slide driven by escalating US-China trade tensions and the RBNZ’s 25 bp rate cut to 3.50%, which highlighted growing concerns over global economic uncertainty. Later in the week, a broad sell-off in US assets and weakening dollar helped lift the kiwi. Looking ahead to April 14–18, the NZD remains vulnerable to further downside as markets price in additional RBNZ cuts, with forecasts suggesting the OCR could fall to 2.67% by year-end, while external risks and global trade disruptions continue to weigh on sentiment.

Expected weekly trading range: 0.79 - 0.82

The Mexican peso weakened by 1.1% over the past week, with USD/MXN fluctuating between 20.11 and 20.99. The decline was driven largely by global market volatility stemming from US-China trade tensions, with Mexico experiencing a sharp 4% drop in the peso over two days, despite not being directly targeted by new tariffs. Domestically, Banxico flagged rising economic uncertainty, noting that evolving US trade policy complicates inflation forecasts, even as March CPI rose to 3.80%, within target. For next week, MXN is likely to remain under pressure, with sentiment shaped by ongoing trade uncertainty, Banxico rate cut speculation, and medium-term support from nearshoring trends that could benefit Mexico’s manufacturing base.

Expected weekly trading range: 14.40 - 14.90