Investors flock to yen and Swiss franc amid fears of economic slowdown; Euro and Pound rally as U.S. growth outlook dims
April 4, 2025: The U.S. dollar nosedived against major global currencies on Thursday as markets digested the fallout of President Donald Trump’s sweeping tariff announcement. The greenback hit six-month lows against the euro, yen, and Swiss franc, as investors scrambled for safe-haven assets amid growing fears of a global economic slowdown and a potential trade war.
Trump’s surprise move to impose a 10% base import tariff on all countries, with elevated rates for China, the EU, and others, sent tremors through financial markets. Global stocks plummeted, and traders began dumping the dollar—once the most crowded trade—amid expectations of weaker U.S. economic growth and strained global trade systems.
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“The FX market is signaling that U.S. growth is in jeopardy,” said Adam Button of ForexLive. “This is a reaction to an economy under threat.”
While the dollar shrugged off weaker U.S. services PMI data, it couldn’t withstand the market-wide selloff. The ISM Services Index fell to a nine-month low, adding to fears of stagflation. Meanwhile, jobless claims remained stable, offering a limited silver lining.
The euro surged 1.74% to $1.1037, its biggest one-day gain since November 2022. The yen gained nearly 2%, while the Swiss franc rallied 2.35%. The British pound climbed to $1.3093, up 0.66%.
Deutsche Bank cautioned that a “crisis of confidence” in the dollar may be underway, as investors look to diversify away from U.S. assets amid policy uncertainty.
“Major shifts in capital flows are replacing traditional currency fundamentals,” the bank noted in its report.
Meanwhile, the Chinese yuan slid to a multi-month low before stabilizing. The Mexican peso and Canadian dollar rallied, reflecting investor confidence in their exemption from additional U.S. tariffs for now.
As attention now turns to Friday’s U.S. jobs report and a speech from Fed Chair Jerome Powell, analysts warn that any signs of a hawkish stance or inflationary pressure could further rattle currency markets.
Tags: US dollar crash, Trump tariffs, forex market, yen, Swiss franc, euro rally, global trade war, US economic slowdown, currency crisis, Jerome Powell speech, ISM services PMI, foreign exchange news