On Friday, the US dollar slid to its weakest level in over a decade, as investors abandoned US assets over economic instability and policy uncertainty concerns. The decline of the greenback triggered a flight to other currencies and assets, including the Swiss franc, Japanese yen, euro, and gold, all surging in a week of ups and downs.

The Dollar Index (DXY), a benchmark that measures the US currency against a basket of six major peers, fell 0.85% on Friday to 100.009. The index briefly dipped below the psychological 100 level for the first time since July 2023. Over the past month, DXY has shed 3.48%, down 5.66% over the last year.

According to Chris Weston, head of research at Pepperstone, markets witnessed a “pronounced ‘sell USD'” sentiment, and capital was “migrating away from Ground Zero.”

“The USD is losing the safe-haven bid,” Weston remarked.

Dollar struggles create demand for other currencies, gold

Data from TradingEconomics show the greenback dropped as much as 1.2% against the Swiss franc to 0.81405, the lowest since January 2015. It also slipped 1.1% against the yen to 142.88, marking its weakest since September 30. 

Against the Canadian dollar, the US currency slumped 0.5% to a five-month low of C$1.3910, while the euro rallied 1.7% to $1.13855, a level last seen in February 2022.

Investors fleeing US assets drove up demand for gold, which climbed to a record $3,219.96 per ounce this week. Since the start of 2025, the precious metal has gained more than 22%, tracking its benchmark price on CFD markets.

“We are entering a pure ‘sell USD’ regime. Rate differentials are losing their sway over the USD for the first time in my life,” reckoned Brent Donnelly, president of Spectra Markets.

Markets were jolted a few times this week, and the frenzy continued after President Donald Trump abruptly announced a 90-day pause on higher tariffs on Wednesday for dozens of US trading partners. 

The unexpected reversal came after the US administration was bombarded with criticism from policymakers, who feared Trump was leading America into a recession. 

Yet, the stubborn POTUS did not extend the pause to China. Trump increased import duties to an effective 145%, which escalated the already tense economic standoff between Washington and Beijing.

On Thursday, the White House clarified that a new 20% levy had been added to the initial 125% duty on Chinese imports. The tariff spike had caused the Chinese yuan to tumble to an all-time low in offshore trading. However, the currency recovered in subsequent sessions, ending the day at 7.3211 yuan per dollar and up 0.1% on Friday’s pre-market sessions.

Wall Street reverses relief rally

Markets initially reacted positively to Trump’s tariff pause, which started a brief relief rally that pushed the S&P 500 index past the 5,000 mark on Wednesday after falling to a 2025 low. But sentiment soured rapidly, and Wall Street stocks plunged again yesterday.

According to Yahoo Finance data, the S&P 500 fell nearly 3.5% at Thursday’s market close, while the Nasdaq Composite (IXIC), dominated by tech stocks, sank 4.3%. The Dow Jones Industrial Average also tanked by around 1,000 points, or approximately 2.5%.

“People were getting a little queasy,” Trump acknowledged on Wednesday, referring to the selloff in US Treasuries. The president admitted watching the bond market closely as investor nerves frayed.

On the US debt side, the benchmark 10-year yield surged nearly 10 basis points on Friday to 4.488%, its steepest weekly rise since 2001. The 20-year bond yield climbed to 4.941%, continuing a month-long uptrend.

The unusual tandem drop in both stocks and bonds triggered alarm. During periods of crisis, investors flock to Treasuries for safety. But this week, they fled from them, reportedly rattling the White House. 

Treasury Secretary Scott Bessent claimed the tariff retreat had been planned to lure nations back to negotiations. 

“The bond market spooked the president,” Ed Yardeni, president of Yardeni Research, told CNN. “Bond vigilantes were screaming that they weren’t happy…and there was a potential for a recession.”

Mohit Kumar, chief economist at Jefferies, called Trump’s change of “a blink” forced by markets. “The reversal is in sharp contrast to the fanfare with which Trump unveiled his tariff policy just a week ago,” he noted.

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