The U.S. dollar remained on shaky ground Wednesday, struggling to sustain a modest rebound as major currencies like the euro, yen, franc, and British pound pushed higher. All eyes have now turned to upcoming trade negotiations with Washington, fueling further market moves.

After weeks of trade policy whiplash—marked by aggressive tariff threats, sudden implementations, and rapid reversals—investor faith in the greenback has been dented. As a result, the dollar is facing headwinds across the board.

The euro, which recently pulled back from a three-year high of $1.1474, regained momentum in Asian trading, climbing 0.6% to $1.1346 and pulling the dollar index below the psychologically key level of 100. The Swiss franc, buoyed by safe-haven demand since President Trump’s dramatic “Liberation Day” tariff declaration, surged nearly 1% to 0.8184 per dollar.

The yen added about 0.5% to hit 142.6 per dollar, not far from a six-month high, while sterling reached $1.3296—also a six-month peak—boosted by Britain's exemption from the harshest U.S. trade penalties and optimistic rhetoric from U.S. Vice President JD Vance about an upcoming trade deal.

Much of the currency market’s attention now turns to high-stakes discussions between Japanese Economy Minister Ryosei Akazawa and U.S. Treasury Secretary Scott Bessent. Speculation is swirling about a potential bilateral understanding that could allow for a stronger yen. However, with speculative positions on the yen at their largest net long since 1986, a disappointing outcome could trigger a swift and sharp market reversal.

Traders are also bracing for a data-heavy day: U.K. inflation figures, U.S. retail sales, and a speech by Federal Reserve Chair Jerome Powell are all on the docket. The Bank of Canada will also meet, with markets split on whether it will cut rates or stand pat.

The Canadian dollar remains firm at C$1.3934 against the greenback, buoyed by a 4% rally in April. It's a clear reflection of investor skepticism over erratic U.S. policymaking and recession concerns. Markets currently assign about a 40% probability to a Canadian rate cut.

Meanwhile, the Australian and New Zealand dollars, which posted their biggest weekly gains since 2020 last week, remained near recent highs—hovering at $0.6350 and $0.5917, respectively.

Despite solid first-quarter economic figures from China, markets reacted tepidly. Instead, traders are keeping a close eye on the yuan and U.S. bond yields for cues on where the dollar heads next. Although Beijing has marginally adjusted the yuan’s trading band, it hasn't dramatically intervened despite the torrent of tariffs now exceeding 100%.

In the U.S. Treasury market—recently rocked by near-panic selling—signs of stabilization have emerged. Many believe the return of the tight bond-yield-to-dollar correlation could offer clarity.

“We see a normalization in the pattern where higher Treasury yields once again support the dollar as a key signal that markets are settling,” said Steve Englander, head of G10 FX research at Standard Chartered. “As trade fears ease and growth outlooks improve, we may see a firmer footing for the greenback.”