The US dollar climbed sharply early Monday after the Trump administration announced a dramatic rollback in tariffs on Chinese imports, marking a major shift in trade policy that energized currency markets and lifted risk sentiment. Tariffs on goods from China have been reduced from 145% to 30%, while China also announced it is cutting its tariffs on US goods from 125% to just 10%. The news sent shockwaves through forex markets, with the greenback surging against all major rivals.

The EUR/USD pair, which had earlier risen to a session high of $1.1242, reversed course rapidly and dropped to $1.1140 as dollar bulls took charge. The USD/JPY pair climbed to a one-month high of ¥147.00, reflecting strong demand for the US currency. Meanwhile, the British pound slipped below $1.3250 as the dollar’s rally intensified, driven by the unexpected trade breakthrough and optimism that tensions between the world’s two largest economies may be easing.

“We have reached an agreement on a 90-day pause and substantially moved down the tariff levels,” Treasury Secretary Scott Bessent said Monday, adding that negotiations would continue in the coming days or weeks if needed. His comments sparked broad-based optimism, pushing the dollar higher and lifting US stock futures across the board. Nasdaq futures soared more than 3% in pre-market trading, as investors rushed back into risk assets following weeks of volatility.

The dollar’s strength is seen as a response not only to improved trade conditions but also to the potential inflationary relief a tariff rollback could bring. Lower import costs may ease pressure on consumer prices, giving the Federal Reserve more flexibility on interest rates while supporting broader economic growth. Traders are now watching closely for follow-up announcements and signs of durable trade progress.

As optimism spreads through global markets, investors are adjusting positions rapidly, pricing in a more cooperative US-China trade stance. With the dollar leading gains and equities rebounding, the market narrative appears to be shifting away from protectionism and toward cautious optimism — at least for now.