Dollar Hits 3-Year Low as Tariff Uncertainty Weighs on Markets (04.14.2025)

The U.S. dollar index fell to a three-year low near 99.5 as markets weighed the Trump administration’s shifting tariff policies and broader economic concerns. 

While temporary exemptions on tech imports eased tensions slightly, uncertainty remains over potential duties within months. The euro strengthened toward $1.14, the yen rallied on safe-haven demand, and gold retreated from record highs. Meanwhile, the pound held firm amid growing BoE rate cut expectations, and silver slipped after a sharp weekly gain. Investors now look ahead to Fed Chair Powell’s upcoming speech for clarity on rate policy.

Dollar Hits 3-Year Low amid Tariff Policy Uncertainty

EUR/USD traded around 1.1390 on Monday after opening lower, while the U.S. dollar index fell to 99.5, its lowest in three years, amid concerns over the U.S. economic outlook and policy uncertainty. The drop followed the Trump administration’s decision to exempt certain tech products from tariffs under the new “reciprocal” trade policy. However, Commerce Secretary Lutnick said these items may still face duties within two months, and Trump confirmed they remain under the 20% Fentanyl Tariffs. Despite a 3% weekly drop in the dollar index and weak consumer sentiment data, Lutnick said he is “not worried” about the dollar.

Key resistance is at 1.1400, followed by 1.1475 and 1.1500. Support lies at 1.1260, then 1.1180 and 1.1100.

Yen Climbs on Tariff Exemption

The Japanese yen strengthened toward 142.5 per dollar on Monday, its highest in over six months, as trade uncertainty increased safe-haven demand. The move followed Trump’s temporary tariff exemptions for tech products under the new "reciprocal" framework. Commerce Secretary Lutnick warned these items may still face duties in two months, and Trump confirmed they remain under the 20% Fentanyl Tariffs. Focus now shifts to U.S.-Japan trade talks, with Japan’s negotiator Akazawa Ryosei set to meet Treasury Secretary Bessent and Trade Representative Greer. Japan, currently facing a reduced 10% tariff, seeks more favorable terms.

Key resistance is at 145.80, with further levels at 148.00 and 152.70. Support stands at 141.80, followed by 141.00 and 139.70.

Gold Eases to $3,220 as Trade Tensions Cool Slightly

Gold fell to around $3,220 on Monday, retreating from its $3,245 record high, as trade tensions eased after Trump granted tariff exemptions on electronics from China. However, Commerce Secretary Lutnick said these goods, including semiconductors, may face new duties within two months, adding uncertainty. Last week’s rally was driven by safe-haven demand after Trump raised tariffs on Chinese goods to 145%, prompting China to hike tariffs on U.S. imports to 125%, effective Saturday. Markets now await Fed Chair Powell’s speech on Wednesday for clues on future rate cuts.

Key resistance is at $3,250, followed by $3,300 and $3,350. Support stands at $3165, then $3135 and $3090.

Pound Firms as Markets Price in BoE Cuts

The British pound traded near $1.31 on Monday, close to last week’s six-month high, supported by broad dollar weakness and rising trade tensions. China’s 34% retaliatory tariffs on U.S. goods and Trump’s efforts to downplay inflation and recession risks fueled market volatility. UK Prime Minister Keir Starmer pledged to shield the economy from U.S. trade fallout. Rate cut expectations rose, with markets now pricing in 85 basis points of BoE easing this year—up from 52—while a May cut is fully priced in.

If GBP/USD breaks above 1.3200, resistance levels are at 1.3270 and 1.3430. Support is at 1.2960, followed by 1.2900 and 1.2850.

Silver Eases as Markets Digest Tariff Pause

Silver edged lower Monday after hitting $32.30 on Friday, despite ongoing dollar weakness and rising economic uncertainty. Safe-haven demand remains strong as the dollar loses appeal amid market stress. While Trump granted a 90-day tariff delay, concerns persist over trade policies pushing the U.S. toward recession. The U.S. now imposes 145% tariffs on Chinese goods, with China retaliating at 84%. Weaker March core inflation has also boosted expectations for more Fed rate cuts, pressuring the dollar and supporting precious metals.

Technically, the first resistance level is located at 32.50. In case of its breach 33.00 and 33.80 could be monitored respectively. On the downside, the first support is at 31.40. 30.20 and 29.00 would become the next support levels if this level is passed.