Global Currency Markets React to Easing Trade Tensions and Central Bank Policies

Global Currency Markets React to Easing Trade Tensions and Central Bank Policies

On June 12, 2025, the global currency markets experienced significant movements as easing trade tensions and evolving central bank policies influenced investor sentiment.

U.S. Dollar Weakens Amid Trade Developments

The U.S. dollar weakened following indications of flexibility in trade negotiations. President Trump suggested a potential extension of the July 8 deadline for trade talks, leading to a decline in the dollar’s value. The greenback dropped 0.43% against the yen and 0.34% against the Swiss franc, reaching its weakest level since April 22 against a basket of currencies. Dollar slides on easing trade tensions, Fed expectations

Euro Strengthens on ECB Signals

The euro surged to a seven-week high at $1.1525, benefiting from hawkish signals from the European Central Bank (ECB). The ECB’s recent decision to halt rate cuts after inflation reached its 2% target further bolstered the euro. Dollar slides on easing trade tensions, Fed expectations

Central Banks’ Policies Impact Currency Markets

In South Korea, Bank of Korea Governor Rhee Chang-yong warned that excessive interest rate cuts could trigger a resurgence in real estate prices and heighten volatility in currency markets. This caution comes despite the country’s sluggish economic performance. Bank of Korea chief says excessive rate cuts could cause price upswing in property markets

Meanwhile, the U.S. Treasury refrained from designating China as a currency manipulator but criticized the lack of transparency in China’s exchange rate policies. This decision arrives amid ongoing efforts to negotiate a trade agreement and avoid a full-scale trade war. US declines to label China a currency manipulator, but blasts its transparency policies

Market Outlook

As global trade tensions ease and central banks adjust their policies, currency markets are expected to remain volatile. Investors should stay informed about ongoing negotiations and policy decisions to navigate the dynamic forex landscape effectively.