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During the trading week of May 19–23, 2025, the U.S. dollar reversed its upward trend and weakened on the international market following former President Donald Trump’s threat to impose a 50% tariff on imported goods from the European Union (EU), set to take effect in early June.
At the close of trading on May 23, the U.S. Dollar Index (DXY)—which measures the greenback's strength against a basket of six major currencies—dropped sharply by 1.88 points to 99.1. This marked the steepest weekly decline in over a month and officially ended a four-week bullish run.
Trump’s statement immediately fueled concerns over the resurgence of a full-blown trade war between the U.S. and the EU. With geopolitical tensions still simmering, the prospect of renewed trade conflict triggered risk aversion across global markets.
As a result, the dollar lost its appeal as a safe-haven asset, with capital flows shifting toward more traditional shelters such as gold, the Japanese yen (JPY), and the Swiss franc (CHF). The market reaction reflects diminishing investor confidence in the dollar during periods when the U.S. is perceived as a source of instability.
The possibility of escalating trade tensions with the EU has raised expectations that the U.S. Federal Reserve (Fed) may need to hold off on tightening its monetary policy. If trade barriers threaten to slow U.S. economic growth, a rate cut scenario could be back on the table.
Such expectations further erode the greenback’s attractiveness, especially as investors increasingly anticipate more accommodative monetary policy in the months ahead.
In the domestic market, the USD/VND exchange rate showed divergent trends. At Vietcombank, the closing rate on May 23 was quoted at 25,740 – 26,130 VND/USD (buy – sell), up 20 VND in both directions compared to the previous week. This suggests that the international dollar weakness has not yet fully filtered into the commercial banking system.
Conversely, the free market showed a decline in USD value, with exchange rates falling by 80 VND in both directions, to 26,320 – 26,420 VND/USD. The contrast highlights investor caution and the influence of external economic signals on local currency dynamics.
The dollar's pullback in the third week of May is more than a technical correction—it reflects growing global unease over U.S. trade policies. As uncertainty mounts, safe-haven demand is shifting away from the dollar toward gold and low-risk currencies. Investors should closely monitor upcoming U.S.–EU trade developments and Federal Reserve policy signals to make well-informed financial decisions in a rapidly evolving global environment.
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