The clearing out of stale dollar long positions over the last few weeks appears to have allowed the greenback to stabilise somewhat after its sharp sell-off so far in March.

We saw truly massive shifts in the FX market last week, with moves not seen since the early chaotic days of the COVID-19 pandemic.

A rather anodyne week in currency trading ended in a dollar buying frenzy on Friday.

For the first time in a while, most of the major currencies traded in tight ranges last week, with the exception of the yen, which continues to rally amid rising expectations for a faster pace of Bank of Japan policy normalisation.

The announcement that the US and Russia would hold peace talks over Ukraine boosted European assets last week, and that included European currencies, led by the euro and the Swedish krona.

President Trump’s decision to postpone tariffs on Canadian and Mexican goods last Monday whipsawed markets, and led initially to a sharp relief rally in major currencies.

The US dollar rallied during almost the entirety of last week as all signs suggested that the imposition of tariffs from the Trump administration was imminent.

A “tariff relief” rally gathered speed last week, as Trump’s flurry of initial activity and executive orders seem to be focused elsewhere for now, and markets hope that their worst fears on tariffs will not be realised.

Financial markets breathed easier after better than expected inflation data out of the US last week.