Stocks are off but capped a week of earnings as Trump’s comments rattled Wall Street

US dollar(dx=f, DX-Y.NYB) retreated further One of its highest levels in almost two years On Friday, it fell to the lowest level in a month after President Trump said he would “prefer not” to impose tariffs on China.

The US Dollar Index, which measures the dollar’s value compared to a basket of six foreign currencies – the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc – is having its worst week in more than a year.

Recent pressures on the US dollar have been largely driven by two major catalysts: Trump’s election and subsequent Republican sweep, coupled with a recalibration of future Fed easing in the face of strong economic data.

But the unknown regarding Trump’s tariff policy has been the biggest driver in recent weeks and looks set to remain that way in the coming months.

Despite recent moves to the downside, analysts at Bank of America say it remains plausible that the market will continue to price in tariff risks when it comes to the dollar.

“Even if tariffs are delayed, they will likely be a key policy plank for the new administration,” wrote Adarsh ​​Sinha, chief FX and interest rates strategist at Bank of America. “Most importantly, uncertainty about the timing of tariff increases remains.”

Meanwhile, Capital Economics expects the dollar index to rise further this year, noting that when adjusted for inflation, the dollar is at its strongest levels since the signing of the international agreement supporting growth. plaza agreement, In 1985.

“We believe US tariff policy and shifts in interest rates could push the dollar higher in the coming quarters,” Simon McAdam, deputy chief global economist at Capital Economics, wrote on Friday.

Instead, Trump refused to activate the tariff order during his first day in office Issuing a memorandum Monday directing federal agencies to evaluate U.S. trade policy.

but As reported by Yahoo Finance’s Ben WerchkulTrump’s first week in office has seen a host of new tariff threats against countries, from Russia to members of the European Union. First, Trump says, 25% tariffs on Canada and Mexico and 10% tariffs on China could be implemented as soon as February 1.

Kyle Chapman, a FX analyst at the Ballinger Group, wrote in an email Monday that the lack of comprehensive tariffs for day one “is the biggest evidence yet that we could hit a peak dollar, although I’m not getting my hopes up yet.” .