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Global currency markets experienced significant volatility on Tuesday as traders navigated multiple challenges, including President Trump’s expanding tariff plans and the market fallout from DeepSeek’s disruptive AI announcement.
Trump’s intention to impose tariffs on computer chips, pharmaceuticals, and steel, coupled with reports of a potential universal tariff system starting at 2.5%, has pushed the dollar higher against major currencies.
This strength comes despite Monday’s tech sector selloff triggered by DeepSeek’s low-cost AI model launch. The dollar’s rise has been particularly pronounced against the euro, which fell 0.7% to $1.04155, while the yen retreated from its safe-haven gains.
As the Federal Reserve begins its two-day meeting, market expectations have shifted, with rate cuts now anticipated around June, though Fed officials have already acknowledged potential impacts from Trump’s policies on their inflation outlook. The European Central Bank’s expected rate cut this week adds another layer of complexity to the currency landscape.
