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Overview
- Dollar Loses Its Shine Amid Trade Tensions and Recession Fears
Investors dumped the dollar last week amid rising tariffs, falling yields, and Fed rate cut bets.
- 90-day tariff pause failed to restore full confidence.
- U.S. bond yields fell as investors sought alternatives.
- Capital rotated into yen, franc, and risk currencies.
- Yen Gains as Safe-Haven Demand Returns
The yen strengthened on risk-off flows and a supportive domestic policy stance.
- Japanese officials welcomed yen strength to ease import costs.
- U.S.–Japan rate gap narrowed on Fed dovishness.
- JPY saw broad inflows during market volatility.
- Aussie Rebounds on Eased Trade Tensions
The Aussie surged as risk sentiment flipped after the U.S. paused new tech tariffs.
- 90-day pause boosted commodity and Asia-linked assets.
- Australia escaped direct tariff impact.
- AUD rose over 4% — top G10 performer of the week.
- Kiwi Bounces from Lows Despite RBNZ Cut
The Kiwi rallied after early losses, driven by short-covering and easing global panic.
- U.S. tariffs on NZ exports hit early-week sentiment.
- RBNZ cut 25bps but maintained a steady tone.
- NZD gained over 3% as risk appetite returned.
Is the U.S. Dollar Losing Its Safe-Haven Status?
The U.S. dollar endured a sharp correction last week as markets reacted to a fresh wave of trade protectionism, rising recession fears, and diverging central bank narratives. Rather than serving as a safe haven, the greenback lost its bid status as investors turned to traditional alternatives like the yen, franc, and even the euro.
Meanwhile, risk currencies such as the AUD and NZD saw unexpected resilience, driven by local central bank actions and improving sentiment mid-week. Let’s break down what moved each USD major.
Daily
With Dollar trading and testing the 99.578 level, price might go under if it does not create any signs of recovery, which until now is still being seen with a sustained downside move.
US-10Y Bonds: US Market Losing Appeal
As the US market loses trust from foreign partners and investors, bonds are also losing ground as investors shifts to other markets for alternative vs the Dollar.
This weakness and deteriorating trust over the US spark a global shift from the Dollar to other alternatives.
USDJPY – Yen Surges on Safe-Haven Demand and Fed-Dovish Outlook
Japanese Lawmakers Call for Stronger Yen to Ease Cost Pressures
Japan’s Liberal Democratic Party (LDP) openly supported a stronger yen last week, citing the need to reduce the burden of high import costs caused by prior JPY weakness. LDP Policy Chief Itsunori Onodera’s remarks came as the yen rallied sharply, compounding downside pressure on USDJPY.
The yen’s strength wasn’t just a reaction to risk-off sentiment. It was endorsed by policymakers, signaling to markets that Japanese authorities won’t resist further appreciation. This coincided with safe-haven demand and the Fed's dovish tone, pushing USDJPY sharply lower.
Daily
With Dollar falling down, Yen is gaining traction over the US dollar amidst this US-led market turmoil. A downside target can be set at 139.577 level as we are not seeing any signs of strength or even a , recovier tiwht USJPY.
4-Hour
A breakdown of the 142.052 - 144.232 level could further send USDJPY to the downside upto the 139.577 level. This weakness exhibits a deteriorating appeal of the US dollar.
Market Driver for this Week
AUDUSD - Aussie Recovers Sharply as Risk Sentiment Improves After 90-Day Tariff Pause
The Australian dollar, often seen as a bellwether for global risk sentiment, staged a powerful rebound last week after the White House announced a temporary 90-day suspension of further tech-related tariffs. This development significantly eased fears of an immediate global trade breakdown and revived appetite for high-beta currencies like the Aussie.
The early part of the week saw AUD under pressure due to escalating U.S.-China trade tensions and concerns over Australian export exposure. Checkout my previous blog: https://acy.com/en/market-news/market-analysis/australian-new-zealand-dollars-sliding-us-dollar-weakening-j-o-04082025-105556/
But once the 90-day delay on enforcement was confirmed mid-week, market sentiment flipped risk-on, driving flows back into AUD/USD. As a commodity-linked and Asia-exposed currency, the Aussie benefited disproportionately from this shift.
Daily
After trading near the 0.59 levels, Aussie had a remarkable bounce which was also driven by a 90-day pause on tariffs on those who did not retaliate against the US amidst the global tariff escalation.
With China throwing punches against the US, this also rose the confidence on the risk currency as China is seen as not backing down against the US which shows strength.
4-Hour
With trade ease stimulus, we could look for upside opportunities on the Aussie Dollar at 0.61276 - 0.62261.
If the imbalance sitting at the mentioned price levels does not get visited and price proceeds for another round of breakout, we could look for bullish sequence and intraday breakouts on 1-Hour or lower resting at 0.6389 level.
This level could also a be an obvious draw on liquidity for price to reach.
NZDUSD - Kiwi Snaps Back from Tariff-Driven Lows as Market Fear Reverses
The New Zealand dollar entered last week under extreme pressure as the U.S. unveiled new tariffs directly affecting Kiwi exports like dairy, wood, and wine. Traders initially dumped NZD amid fears of supply chain disruption and reduced demand.
But by midweek, Washington’s unexpected 90-day pause on tariff enforcement flipped sentiment, triggering a sharp recovery in risk assets — and the oversold Kiwi followed.
Why It Mattered:
This wasn’t just a case of global relief; it was a reset from panic pricing
With the RBNZ delivering a fully anticipated 25bps rate cut, there were no surprises to reinforce the sell-off. Instead, the combination of a temporary geopolitical breather and mean-reversion behavior led to heavy short covering in NZD/USD. It was a classic case of risk unwinding — fast, sharp, and sentiment-driven.
4-Hour
Currently, Kiwi is trading and testing the resistance level at 0.58531. Potential opportunities on Kiwi:
- Bounce at the nearest volume imbalance resting at the 0.57654 - 0.57983 levels.
- Confirmed breakout of the 0.58531 level with a sustained bullish sequence on 1-Hour could push Kiwi to a more upside move.
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This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.
