Published by Global Banking & Finance Review®
Posted on May 30, 2025
4 min readLast updated: January 23, 2026
Add as preferred source on GoogleThe dollar is mixed amid tariff uncertainty, achieving its first monthly gain against the yen this year as legal battles over Trump's tariffs continue.
By Karen Brettell
NEW YORK (Reuters) -The dollar was mixed on Friday but on track for the first monthly gain against the Japanese yen this year as investors factored in the likelihood of trade tariffs remaining in some form, even as U.S. President Donald Trump faces a court battle over his authority to impose them.
A federal appeals court temporarily reinstated the most sweeping of Trump's tariffs on Thursday, a day after a U.S. trade court ruled that Trump had exceeded his authority in imposing the duties and ordered an immediate block on them.
While the exact level of tariffs that will remain on trading partners is unknown, traders expect the levies to persist in some form.
“We're going to have some tariffing. Maybe not as exciting as was announced on April the 2nd, but we're still going to get it,” said Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank NY Branch.
“The one thing that the court ruling may have done is limited the amount of shocks that Trump can unleash with a headline or with a comment at a press conference,” Englander said.
White House trade adviser Peter Navarro said on Thursday that the Trump administration will seek to enact tariffs through other means if it ultimately loses the court fights over its trade policy.
Investors are concerned that tariffs will slow growth and reignite inflation, though deals to drop tariff increases on China and the European Union as they negotiate trading terms have reduced pessimism over the U.S. economic outlook.
The dollar briefly bounced on Friday after Trump said that China had violated an agreement on tariffs with the United States. A day earlier, Treasury Secretary Scott Bessent said that trade talks between the U.S. and China were “a bit stalled.”
Trump later on Friday said he will speak to China's President Xi Jinping and hopefully work out their differences on trade and tariffs.
Tariffs are seen as a key source of revenue as Congress works on a bill to reduce some income taxes.
The dollar showed little reaction to data on Friday showing that U.S. consumer spending increased marginally in April as a rush to beat higher prices from import duties slowed, while inflation eased during the month.
A separate report showed that the U.S. trade deficit in goods narrowed sharply in April as the boost from the front-running of imports ahead of tariffs faded.
“Nothing in the data was such a clear surprise relative to expectations that would generate a definitive market move,” said Englander.
May’s jobs report due for release next Friday will be closely watched for any indications that the labor market is weakening, after data on Thursday showed a bigger-than-expected jump in jobless claims in the latest week.
"Further USD weakness needs weaker data," Bank of America analysts Athanasios Vamvakidis and Claudio Piron said in a report on Friday.
"If somehow the US economy keeps defying gravity, we would expect investors to start ignoring the policy noise and go back to buying US assets, supporting the USD; US exceptionalism would be back. However, if the US economy has a proper landing, we would expect the USD to weaken further to new lows for the year," they said.
The euro was last down 0.12% at $1.1356. It is on pace for a 0.27% monthly gain, the smallest since February.
German inflation eased further in May, bringing it closer to the European Central Bank's 2% target and bolstering the case for an interest rate cut next week.
The dollar weakened 0.21% to 143.88 Japanese yen. The greenback is on track for a monthly increase of 0.6% against the Japanese currency, the first green month since December.
Core inflation in Japan's capital hit a more than two-year high on persistent rises in food costs, data showed on Friday, keeping the central bank under pressure to hike interest rates further.
(Reporting by Karen Brettell. Additional reporting by Johann M Cherian in Singapore and Linda Pasquini in Gdansk. Editing by Mark Heinrich, Mark Potter and Nia Williams)
The dollar weakened 0.21% to 143.88 Japanese yen, but is on track for a monthly increase of 0.6% against the yen, marking the first gain since December.
Investors are concerned that tariffs will slow growth and reignite inflation, although negotiations to drop tariff increases on China and the EU have reduced pessimism.
The dollar briefly bounced after Trump claimed China violated a tariff agreement, and he expressed hope to resolve trade differences with President Xi Jinping.
Data showed that U.S. consumer spending increased marginally in April, while the trade deficit in goods narrowed sharply as the impact of front-running imports faded.
Bank of America analysts suggest that if the U.S. economy continues to perform well, investors may ignore policy noise and start buying U.S. assets, supporting the dollar.
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