Dollar Volatility Spikes as Tariff Uncertainty Returns to Markets

The US dollar has been trading erratically across the first week of April 2026 as markets digest a new round of tariff announcements from Washington targeting electronics, automotive imports, and select agricultural goods.

EUR/USD moved roughly 1.2% in a single session on April 4, hitting levels not seen since late 2025, before reversing sharply the following day. USD/JPY has been similarly choppy, with the Bank of Japan keeping rates steady but signalling it remains open to further normalisation if domestic inflation holds.

What is driving the moves

The immediate catalyst is trade policy uncertainty. Markets have learned over the past several years that tariff announcements and counter-announcements can shift risk appetite quickly, moving safe-haven currencies like the yen and Swiss franc alongside the dollar.

Underlying this, however, is disagreement about the Fed’s next move. CME FedWatch data shows rate cut expectations have been revised sharply over the past month as inflation data has come in stickier than expected. Fewer expected cuts support the dollar but weigh on risk assets globally.

What this means for retail traders

High volatility environments create opportunity, but they also expand spreads during fast markets and increase the likelihood of slippage. Traders using wider stops may be better positioned than those using tight technical levels in these conditions.

If you are trading major pairs right now, check whether your broker offers guaranteed stops, and verify whether spreads widen significantly during news events. Our broker reviews include spread data under normal and volatile conditions.