Mitsubishi UFJ: Trump's tariff plan key to dollar outlook

Trump's trade policies will play a key role in the future performance of the U.S. dollar, Mitsubishi UFJ analysts said in a report. The dollar's recent reversal partly reflects rising investor optimism that Trump's trade plans may not be as damaging to the global economy as feared. However, trade policy uncertainty is likely to remain high for now. If Trump implements damaging tariffs, the U.S. dollar could make a strong comeback in the second quarter. This could also trigger increased volatility in FX markets. Conversely, if all of Trump's tariff threats are significantly watered down and/or a trade deal emerges, the dollar could see a sharper pullback.