The U.S. Dollar Index (DXY) opened the week on the same weak note it closed the previous week, declining to a one-month low of 98.70 during Monday’s Asian session. This brings it closer to multi-year lows of 97.95 recorded in late April. The decline comes amid improved risk appetite in global markets, following U.S. President Donald Trump’s decision to backtrack on imposing 50% tariffs on European Union imports.
This decision, announced after a phone call between Trump and European Commission President Ursula von der Leyen, included a postponement of the tariffs that were initially set to take effect on June 1, allowing both sides more time to reach a trade agreement. This development had a positive impact on investor sentiment, easing fears of additional pressure on the global economy from escalating trade tensions.
Trade between the U.S. and the EU accounts for roughly 30% of global GDP, and any escalation in mutual tariffs especially alongside existing duties on China could have weighed heavily on the global economic outlook.
In addition, Trump noted that the U.S. tax code is set to undergo significant revisions in the Senate, which helped ease investor concerns regarding U.S. fiscal stability and supported a shift toward higher-risk assets.
In this context, the dollar weakened not only against risk-sensitive currencies but also against traditional safe havens like the Japanese yen and Swiss franc. The Dollar Index fell by 0.3% on the day and is down nearly 3% from its early May highs. Trading volumes are expected to remain light due to the U.S. holiday.
Looking ahead, market focus will turn to the upcoming release of the Personal Consumption Expenditures (PCE) Price Index, which could offer further insights into the Federal Reserve’s policy direction and impact the dollar’s performance.
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