USD/JPY is trading 0.12% lower near 157.85 during Monday’s European trading session. The pair is under pressure as the US Dollar (USD) has broadly underperformed, following the US announcement of tariffs on several members of the European Union (EU) and the United Kingdom (UK).
At press time, the US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, was down 0.2% near 99.18.
US dollar price today
The table below shows the percentage change in the US Dollar (USD) against the major currencies listed today. The US dollar was the weakest against the Swiss franc.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.21% | -0.22% | -0.13% | -0.20% | -0.24% | -0.50% | -0.52% | |
| euro | 0.21% | -0.00% | 0.09% | 0.02% | -0.03% | -0.29% | -0.31% | |
| GBP | 0.22% | 0.00% | 0.11% | 0.02% | -0.03% | -0.28% | -0.31% | |
| JPY | 0.13% | -0.09% | -0.11% | -0.09% | -0.13% | -0.39% | -0.42% | |
| Canadian | 0.20% | -0.02% | -0.02% | 0.09% | -0.04% | -0.30% | -0.33% | |
| Australian dollar | 0.24% | 0.03% | 0.03% | 0.13% | 0.04% | -0.27% | -0.28% | |
| New Zealand dollar | 0.50% | 0.29% | 0.28% | 0.39% | 0.30% | 0.27% | -0.03% | |
| Swiss franc | 0.52% | 0.31% | 0.31% | 0.42% | 0.33% | 0.28% | 0.03% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select USD from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
On Saturday, US President Donald Trump imposed 10% tariffs on European Union members in response to their opposition to Washington’s desire to buy Greenland. In response, EU members jointly condemned Trump’s tariff threats as “blackmail”, which would be responded to with similar countermeasures.
European Commission President Ursula von der Leyen warned that territorial integrity and sovereignty are fundamental principles of international law, and that such definitions would undermine “transatlantic relations” that could threaten a “dangerous downward spiral.”
Meanwhile, US markets will remain closed on Monday in honor of Martin L. King’s birthday.
Although investors supported the Japanese Yen (JPY) against the US Dollar (USD), the latter underperformed its other counterparts, as Japanese Prime Minister Sanae Takaishi announced that she would dissolve the lower house of parliament on January 23. “My administration will put an end to excessively tight fiscal policy,” Takaishi added.
This week, the main driver for the Japanese yen will be the monetary policy announcement by the Bank of Japan (BoJ) on Friday. The Bank of Japan is expected to keep interest rates steady at 0.75%.
(This story was corrected at 11:11 GMT on Monday to say in the first paragraph that the tariff announcement was made by the US on several EU members and the UK, not the US..)
Frequently asked questions about the US dollar
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a large number of other countries where it is traded alongside local banknotes. It is the world’s most traded currency, accounting for more than 88% of total global forex trading volume, or an average of $6.6 trillion in transactions per day, according to 2022 data. After World War II, the US dollar took the place of the British pound as the world’s reserve currency. For most of its history, the US dollar was backed by gold, until the Bretton Woods Agreement in 1971 when the gold standard disappeared.
The most important factor affecting the value of the US dollar is monetary policy, which is shaped by the Federal Reserve. The Fed has two missions: achieving price stability (controlling inflation) and promoting full employment. The basic tool for achieving these two goals is adjusting interest rates. When prices rise too quickly and inflation is above the Fed’s 2% target, the Fed will raise interest rates, which helps the value of the US dollar. When the inflation rate falls below 2% or when the unemployment rate is very high, the Fed may cut interest rates, which affects the dollar.
In extreme cases, the Fed could also print more dollars and activate quantitative easing (QE). Quantitative easing is the process by which the Federal Reserve dramatically increases the flow of credit into a stuck financial system. It is a non-standard policy measure used when credit dries up because banks will not lend to each other (due to fear of the counterparty defaulting). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It has been the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis of 2008. This involves the Fed printing more dollars and using them to buy U.S. government bonds mostly from financial institutions. Quantitative easing usually leads to a weakening of the US dollar.
Quantitative tightening (QT) is the reverse process whereby the Fed stops purchasing bonds from financial institutions and does not reinvest capital from bonds it holds outstanding in new purchases. It is usually positive for the US dollar.
