US dollar surges after court blocks Trump tariffs

(Dan Tri) - The unexpected reversal from the judiciary has caused the greenback to "swim against the current" after months of decline due to Mr. Trump's volatile trade policy.

The US dollar has just made an impressive recovery after a trade court ruled that President Donald Trump could continue to impose import tariffs on goods from partner countries. The decision immediately breathed new life into the currency market, surprising investors.

The ruling comes as President Trump attempts to expand his “trade localization” tariff policy, which has been criticized for damaging the US economic reputation and fueling inflation. The court found that Trump had exceeded his authority by unilaterally imposing tariffs on imports from multiple countries.

Immediately after the ruling was announced, the Trump administration immediately filed an appeal, opening the door to a new legal battle that could be lengthy.

The US dollar is rising, but is it sustainable?

The impact on markets was immediate: the dollar rose sharply against most major currencies. Against the Japanese yen, the dollar rose 0.64% to 145.77, having hit a two-week high of 146.2. Against the Swiss franc, the dollar rose 0.67% to 0.83245. The dollar index, which measures the greenback against a basket of six major currencies, broke above 100 for the first time in a week.

After a trade court ruled to block President Donald Trump from imposing import tariffs on goods from partner countries, the greenback made an impressive comeback after months of decline (Photo: Freepik).

However, experts remain cautious. “This is just a temporary reaction. As the appeal process continues, the possibility of the dollar’s ​​rise remaining strong is very fragile,” said Hirofumi Suzuki, chief strategist at SMBC.

The dollar index is still down 8% year to date. Since Mr Trump imposed the tariffs on April 2, the greenback has lost 2% against the yen, nearly 6% against the Swiss franc and 4% against the euro.

Many experts say that if Trump's tariffs are canceled, it will be good news for the US economy and the USD.

“Tariffs put pressure on inflation, increasing prices and stifling growth. Removing them will help restore confidence in the dollar,” said Yunosuke Ikeda, head of macro research at Nomura in Tokyo.

Meanwhile, Tohru Sasaki, a strategist at Fukuoka Financial Group, said the market is currently “buying the dollar on positive news, not dumping the yen.” He warned that if the dollar breaks above 148 yen, speculative short positions on the yen could be “forced to close,” sending the USD/JPY pair higher.

The "sudden brake" reverses the market

The dollar, along with US stocks and long-term Treasury bonds, have all plunged in recent months ahead of the court ruling. Investors have lost confidence in the strength of the US market as Mr Trump’s tax and trade policies have been seen as erratic, unstable and exacerbating the budget deficit.

Also this week, credit rating agency Moody's downgraded the US credit rating, warning that the fiscal situation is clearly deteriorating.

However, market sentiment has improved slightly after Mr. Trump unexpectedly delayed his plan to impose a 50% tariff on imports from the EU over the weekend. Along with that, investors also hope that the US will start to seek common ground with its trading partners instead of continuing the policy of "taxing to negotiate".

US Treasury bonds also reacted strongly: the 10-year yield rose 2.6 basis points to 4.503%. At the same time, US stock futures and Asian exchanges rose as risk-on sentiment returned.

Investors also adjusted their expectations for the Federal Reserve's monetary policy, reducing their forecast for a rate cut to 42 basis points from 50 at the beginning of the week, according to data from LSEG.

The dollar’s ​​recent rally is a notable headwind amid the storm of uncertainty caused by Trump’s policies. However, with a legal battle ahead and economic risks yet to be resolved, markets should probably brace for further shocks.

Source: https://dantri.com.vn/kinh-doanh/dong-usd-bat-tang-manh-sau-khi-toa-an-chan-thue-quan-cua-ong-trump-20250529135455666.htm