The US dollar rose sharply after Trump’s softer statements on the Fed and signals of an easing of the trade war with China

April 23, 2025

Photo: Getty images

On Wednesday, the US dollar showed a sharp rise and then stabilised, responding to Donald Trump’s backtracking on criticism of the Federal Reserve and optimism about talks with China.

After several days of pressure on the Fed, the US President publicly stated that he did not intend to dismiss the head of the regulator, Jerome Powell.

“I don’t intend to fire him,” Trump told reporters at the White House, “I want him to be more active in cutting rates.”

This statement was perceived as a signal of stability in the Fed’s policy, which immediately pushed the dollar up in the Asian trading session.

How the markets reacted

Against the Japanese yen, the dollar rose by more than 1% to 143.21, later stabilising at 141.85.
Against the Swiss franc, it rose by 0.4% to 0.8222 after rising by more than 1%.
The euro fell by 0.2% to $1.1393, and the pound sterling by 0.15% to $1.3313.

Earlier this week, the dollar was at multi-year lows, while investors were actively exiting US assets due to fears of interference with the Fed’s independence and trade disputes.

“Trump cannot allow the market to collapse. His statement is music to investors’ ears,” said Prashant Newnaha, senior strategist at TD Securities.

Trade thaw: The US is making compromises

Another important factor was the hope of de-escalating the trade war with China. Trump and US Treasury Secretary Scott Bessent hinted that a significant reduction in tariffs is possible if an agreement is reached.

“A trade deal with China could cut tariffs significantly,” Trump said, “but not to zero.”

Bessent added that neither side considers the status quo acceptable, and Washington’s goal is not to sever economic ties with Beijing, but to strike a balance.

So far, 18 countries have submitted tariff proposals, and another 34 will hold talks with the US delegation this week.