In early trading on Friday, the U.S. dollar found stability, while the euro climbed to its highest level in five months, reflecting market concerns over escalating global trade tensions and the potential for a significant economic slowdown.
Market volatility intensified following U.S. President Donald Trump’s threat to impose customs duties as high as 200 percent on wine imports and other alcoholic beverages from Europe. This threat follows the European Union’s announcement of impending tariffs on American whiskey and various products, which will come into effect next month, as a countermeasure to Trump’s recently enacted 25 percent tariffs on steel and aluminum imports.
The euro experienced a dip, trading at $1.0847, after reaching its peak on Tuesday. Meanwhile, optimism surrounding a potential ceasefire between Ukraine and Russia has diminished. Although Moscow expressed conditional support for the U.S. proposal, it also indicated that a thorough review would be necessary.
This decline in the euro has contributed to the dollar’s recovery from its lowest point since mid-October, where it was recorded at 103.21 on Tuesday. Despite persistent worries regarding future economic conditions in both the U.S. and the global arena, the dollar’s position has strengthened.
Tony Sikammore, a market analyst at IG, commented, “The most pressing question across asset classes is… where do we begin to see news that will boost risk sentiment? Currently, that answer remains unclear.”
Since reaching a six-month peak in January, the dollar has depreciated more than five percent, losing momentum against major currencies such as the euro, British pound, and Japanese yen.
On Friday, the yen slightly retraced its gains, trading at 148.32 yen per dollar, reflecting a 0.35 percent increase for the U.S. currency. Earlier in the week, the yen had strengthened to 146.545 per dollar amid safe-haven demand and speculation that the Bank of Japan may raise interest rates later this year.
The dollar index, which gauges the performance of the U.S. dollar against a basket of major currencies, increased by 0.1 percent to reach 103.95.