Investors reacted to U.S. President Donald Trump's imposition of extensive tariffs on the global economy by selling the dollar and seeking refuge in safe-haven currencies like the yen and Swiss franc. This led to a market sell-off that impacted pro-growth currencies such as the Australian and New Zealand dollars, with U.S. stocks experiencing significant losses totaling nearly $6 trillion the previous week. Amid concerns of a possible global recession, the Australian dollar fell by 0.73% to $0.6001 and the New Zealand dollar dropped by 0.75% to $0.5554.

Following the tariffs, over 50 countries have initiated trade discussions with the U.S., and China responded by imposing additional tariffs on U.S. goods and restricting some rare earth exports. As a result, the dollar depreciated by 1.3% against the yen to 144.95 and the Swiss franc strengthened by over 1% to 0.85095 per dollar. These safe-haven currencies, along with assets like government bonds and gold, saw increased demand due to the prevailing market uncertainty.

The erosion of the dollar's safe-haven status is evident as worries about the impact of tariffs on U.S. growth grow. The euro rose by 0.26% to $1.0994, while the pound dipped by 0.13% to $1.2889. The dollar, measured against a basket of currencies, declined by more than 0.4% to 102.48, reflecting a 1% drop from the previous week. Market participants anticipate further rate cuts by the Federal Reserve to support economic growth, with futures predicting up to 100 basis points of rate cuts by December and Fed Chair Jerome Powell indicating a need for cautious decision-making.