The euro jumped 2.2% against the dollar on Thursday, reaching $1.1021 — its strongest level in six months and the largest one-day gain since December 2015.
The sharp move came after President Trump unveiled tougher-than-expected tariff measures, including a 10% baseline on all U.S. imports and higher rates for specific trading partners. Markets interpreted the announcement as a significant shift in trade policy, prompting broad recalibration across currencies and assets.
Investors rotated out of the dollar and into perceived safe havens. The Japanese yen and the Swiss franc each strengthened to six-month highs versus the greenback, while the British pound gained 1.3%. Demand for traditional safety assets also pushed capital into government bonds and gold, contributing to declines in global equity markets.
Market commentary highlighted concerns about the announcement’s potential to create sustained uncertainty. Deutsche Bank warned that such measures could trigger a “crisis of confidence” in the U.S. dollar, noting that country-specific tariffs may be used as leverage in negotiations and could make it harder for trading partners to obtain durable concessions. Analysts said this mix of policy risk and protectionist signaling is likely to keep volatility elevated across currency and asset markets until clarity emerges.
Traders and portfolio managers reacted quickly to reassess risk exposures. The dollar’s sudden fall reflected both a flight to safety and doubts over the medium-term outlook for U.S. trade policy and economic relations. Currency markets now face the prospect of renewed swings as participants digest revised tariff expectations and any subsequent policy adjustments from the U.S. or affected trading partners.
In the near term, market watchers expect continued sensitivity to trade-related headlines. Any further details or changes to the tariff framework could trigger additional moves in the euro, yen, franc and pound, as well as shifts in bond yields and commodity prices. Central banks and governments will likely monitor the situation closely, given the potential for spillovers to growth and financial stability.
Overall, the tariff announcement has reshaped short-term market dynamics, strengthening safe-haven currencies and pressuring the dollar while increasing caution among investors worldwide.