Dollar drops nearly 2% in an unusual response to US tariffs

The dollar saw a sharp decline across the board on Thursday, hit hard by the latest sweeping import tariffs announced by President Trump on Wednesday.

The dollar index plunged to a six-month low, accelerating downward and losing nearly 2% of its value—the largest single-day drop in years.

Despite expectations that risk aversion would typically strengthen the greenback, the fresh weakness instead amplified the impact of tariffs on the US while complicating trade relations with global partners.

Technically, the outlook has deteriorated further on the daily chart, with moving averages in a full bearish setup, 14-day momentum deepening in negative territory, and the latest drop breaching the support line of the bearish channel—confirming the continuation of the broader downtrend. A break below the key support at 102.24 (76.4% Fibonacci retracement of the 99.84–110.00 rally) paves the way for a potential slide towards 100.00 (psychological level) and 99.84 (the September 27, 2024, low).

Some profit-taking may emerge following the steep decline, but strong negative sentiment is expected to keep the dollar under pressure and limit any rebound.

The broken Fibonacci level at 102.24 now acts as resistance, likely capping any upside and reinforcing the bearish outlook.

Res: 101.79; 102.24; 102.82; 103.07
Sup: 100.94; 100.40; 100.00; 99.84