The US dollar staged a dramatic comeback on July 2, 2025, rebounding from its 3.5-year low against a basket of major currencies.
US Dollar Rebounds from 3.5-Year Low: A New Era of Volatility in Forex?
The sudden reversal has sent shockwaves throughout the financial markets, leaving many investors wondering what’s behind this unexpected move.
S&P 500 Index Hits New All-Time High
As the US dollar was plummeting to new lows, the S&P 500 index found itself climbing to fresh all-time highs. This seemingly counterintuitive move highlights the complex relationship between equity markets and currency fluctuations.
NASDAQ 100 Falls, but Not for Long
In contrast, the NASDAQ 100 index suffered a decline yesterday, weighed down by concerns over the tech sector’s continued growth and valuation multiples. However, the index quickly recovered, and its losses were largely erased as markets digested the latest news.
US Dollar Index Falls to 3.5-Year Low
The US dollar index, which tracks the greenback’s value against a basket of six major currencies, fell to a new 3.5-year low.
Trump Threatens Japan with 35% Tariff
In a surprise move, President Trump announced plans to impose a 35% tariff on Japanese goods, citing ongoing trade disputes and a desire to rebalance the country’s trade deficit.
India Deal Hints at New Trade Dynamics
In an unexpected turn of events, President Trump hinted at the possibility of a trade deal with India, stating that the two nations were “working very closely” together.
Implications for Forex Traders
The US dollar’s rebound from its 3.5-year low presents both opportunities and challenges for forex traders.
Short-Term Outlook
In the coming days, markets will closely monitor the impact of the US dollar’s rebound on currency pairs.
Long-Term Outlook
Looking ahead, the US dollar’s trajectory will depend on a range of factors, including the Fed’s monetary policy decisions, global economic growth, and ongoing trade tensions.
