U.S. Trade Tensions Weigh on the Dollar and Boost the Euro and Yen
The U.S. dollar saw a notable decline during Friday’s trading session (July 4, 2025), after initially opening with strong gains supported by better-than-expected non-farm payroll data, which showed an increase of 147,000 new jobs in June. Despite the positive figures, markets largely ignored the data due to rising trade tensions, following comments from the U.S. President hinting at possible new tariffs on Japan and several other trading partners ahead of the July 9 deadline.
This tariff threat triggered market concerns, pushing investors toward safe-haven assets such as the Japanese yen, which gained 0.6% against the dollar throughout the day. The euro also benefited from dollar weakness, rising by 0.4%, indicating that the pressure on the greenback is driven more by political factors than economic ones. Historically, geopolitical and trade tensions tend to push investors away from riskier assets and into more stable currencies.
It is worth noting that these developments come during a period of relative calm in U.S. markets due to the Independence Day bank holiday, which increases market sensitivity to any surprise news. These tensions represent a real test for dollar stability in the coming days, especially if the rhetoric turns into concrete action. Analysts expect the dollar to remain under pressure unless the U.S. administration sends clear signals to de-escalate the trade conflict.
