Dollar retreats amid uncertainty over trade policies

The US dollar has depreciated against major currencies, including the euro, Swiss franc, Japanese yen, pound sterling, and Swedish krona, since US President Donald Trump took office.

Experts believe that uncertainty surrounding the Trump administration's trade policies has weakened the greenback.

The Intercontinental Exchange's Dollar Index (DXY), which measures the greenback against a basket of six benchmark currencies, registered a decline of 8.54 percent, falling from 108.49 to 99.23 units, from January 20 to April 24. For the year, the DXY registered a drop of 8.53 percent.

Since Trump took office, the currencies that have appreciated the most against the dollar are the Russian ruble (18.89%), followed by the Swedish krona (14.16%), the euro (9.84%), the Danish krone (9.79%), the Swiss franc (9.61%), and the Norwegian krone (8.82%).

This list is followed by the pound sterling with 8.76%, the Japanese yen with 8.75%, the New Zealand dollar with 6.75%, the Brazilian real with 6.38%, and the Mexican peso with 5.75%.

Fears of recession and tariffs

Changes in U.S. trade policy have a significant impact on the dollar, noted Michael Cahill, senior currency strategist at Goldman Sachs Research, in a report.

The expert considered that rising trade tensions and other policies that generate uncertainty are eroding consumer and business confidence.

“Changing perceptions of U.S. governance and institutions are also affecting the attractiveness of U.S. assets to foreign investors, and rapidly changing policy decisions make it difficult for investors to consider outcomes that aren't subject to significant uncertainty,” he noted.

Barclays experts wrote that tariffs on Canada and Mexico and the peace dispute with Ukraine represent a deterioration for the dollar.

"The continued loss of credibility stemming from Liberation Day left the dollar in a particularly fragile position." Furthermore, Trump's statements, including the possibility of dismissing Federal Reserve Chairman Jerome Powell, worsened the dollar's situation.

In a study, Banamex found that "political uncertainty remains high, with external risks dominating in the face of Trump's tariff policies."