Dollar dips as tariff uncertainty returns and U.S. stock futures soften

The market move followed weekend headlines tying new tariff threats to transatlantic tensions, which pushed risk assets onto the back foot and nudged investors into safer holdings. In early Europe, U.S. tech proxies fell and the dollar lost ground, reflecting a risk-off tilt consistent with historical reactions to trade-policy shocks.

Currency desks reported pressure on the greenback against select majors as traders reassessed relative growth paths and the Federal Reserve’s reaction function. Elevated tariff uncertainty typically tightens global financial conditions, weakens trade volumes and raises the chances of “policy error” if central banks misread second-round effects on prices and activity – dynamics that help explain simultaneous softness in the dollar and weakness in cyclically sensitive equities.

European risk gauges opened defensively, with analysts flagging export-exposed sectors as immediate shock absorbers while noting that any formal tariff schedule would determine the ultimate macro hit. In the near term, investors are watching for guidance from Washington and Brussels on carve-outs or staging that could mitigate supply-chain dislocation and smooth FX volatility.

The broader backdrop remains a tug-of-war between resilient hard data and episodic policy noise. Just days earlier, global stocks and the dollar rose after U.S. payrolls data kept a soft-landing narrative intact, underscoring how swiftly positioning can swing as the policy and data tapes alternate. That whipsaw context is elevating the premium on liquidity across FX and rates books.

What markets are watching next: desk notes point to (1) whether tariff rhetoric crystallizes into a formal proposal with scope and timelines, (2) any European Commission signaling on countermeasures, and (3) updates to central-bank reaction functions if exchange-rate channels amplify disinflation or, conversely, import-price pass-through. In FX, that translates into close tracking of DXY’s correlation with U.S. front-end yields and the relative performance of export-heavy European currencies under fresh trade uncertainty.