The US dollar decreased against the Japanese yen and Swiss franc on Wednesday due to concerns over the US imposing 104% tariffs on China, causing global stock markets to falter and the Chinese yuan to reach record lows.

President Donald Trump remained firm on the decision to increase tariffs on China by 50%, accusing Beijing of manipulating its currency to counteract the tariffs. Analysts, such as Chris Weston from Pepperstone, warned of potential consequences on the US economy, hinting at a looming recession.

The dollar reached a historic high against the yuan offshore, surpassing its previous peak. Markets awaited China's central bank decision on potential further devaluation. Concerns about a US economic slowdown led to speculation of more Federal Reserve interest rate cuts, with futures pricing in significant cuts for the year.

Losses in US stock futures and a surge in demand for safe haven currencies like the yen and Swiss franc were observed. Analysts expressed preference for being long on the yen due to fears of stagflation in the US and escalating trade tensions.

The dollar's value against the yen fell by 0.7% while the Swiss franc saw it drop to a six-month low. The euro also saw gains following reports of a possible government formation deal in Germany, easing political uncertainties in the EU's largest economy.