Catenaa, Wednesday, May 28, 2025- The dollar rose sharply Tuesday after President Donald Trump postponed higher tariffs on the European Union, a move that steadied global markets and prompted renewed dollar buying, while the yen slipped amid a sharp fall in Japanese bond yields.
With US and UK markets reopening after a Monday holiday, currency traders responded to weekend news of Trump backing away from near-term trade escalation. The dollar index climbed 0.4%, reversing losses from late last week.
Analysts said Trump’s decision to pause new EU tariffs calmed investors who had feared further disruption to transatlantic trade.
The dollar showed particular strength against the yen, rising 0.75% to 143.91 yen.
The Japanese currency weakened as yields on long-dated government bonds fell sharply following reports that the Ministry of Finance considering cutting issuance of 30- and 40-year bonds.
Traders interpreted the move as a signal that Tokyo may act to ease fiscal pressures amid global bond market volatility.
Reports said that the Japanese government was monitoring the debt market, while Bank of Japan warned that inflation risks remained, hinting at future rate hikes.
Markets also focused on Trump’s tax-cut bill, now in the Senate, which is expected to add $3.8 trillion to US debt.
The proposal follows a Moody’s downgrade of the US credit outlook on May 16.
