The US dollar weakened to its lowest level in a week on February 26, 2026, as investors scaled back positions in response to intensifying geopolitical tensions, renewed trade frictions, and a landmark US Supreme Court ruling that curtailed emergency tariff powers.
The greenback fell during and after President Donald Trump’s State of the Union address, reflecting market unease over the absence of fresh policy clarity and ongoing global uncertainties. Against the British pound, the dollar slipped to 1.3575 from 1.3559, while it retreated to 1.1829 versus the euro and 0.7711 against the Swiss franc—marking gains for both European currencies.
The dollar also softened against the Japanese yen, moving to 155.76 from 156.36, with some analysts warning that sustained selling could push it toward the 152.00 level if risk aversion deepens. In contrast, the Canadian dollar held relatively steady, trading in a narrow band between CAD1.3675 and CAD1.3705 after touching a monthly high near CAD1.3725. Traders are monitoring around CAD475 million in CAD1.37 options expiring soon, which could act as near-term support, with CAD1.3760 eyed as the next resistance.
Market sentiment was rattled by several converging developments:
– The Supreme Court’s decision limiting the president’s authority to impose reciprocal tariffs without congressional approval has forced a reassessment of US trade strategy. The White House has since signaled intent to pursue a 15% global tariff through alternative legal pathways, prompting trading partners to prepare for renegotiations or retaliatory measures.
– Diplomatic talks between Washington and Tehran remain fragile, with President Trump reiterating warnings of potential military action should negotiations collapse, heightening fears of escalation in the Middle East.
– Persistent US-China trade friction continues to weigh on sentiment, adding to the broader uncertainty clouding global growth prospects.
As a result, investors rotated into traditional safe havens. Gold and oil prices rose as traders sought protection against geopolitical and policy risks, while the dollar’s broad-based retreat underscored growing caution toward the world’s reserve currency.
In Nigeria, the naira’s ongoing appreciation gained further momentum amid the dollar’s global softness. Parallel market traders reported increased selling pressure, with dollar holders—many of whom acquired positions at significantly higher rates—now offloading at a loss as the local currency strengthened.
Forex strategists anticipate continued volatility in the near term, with the dollar potentially finding temporary support around 1.21 against the euro and 0.76 against the Swiss franc if risk sentiment stabilises. However, any escalation in Middle East tensions or fresh trade developments could accelerate the greenback’s decline.
With key diplomatic engagements in Geneva, policy signals from Washington, and economic data flows from major economies, currency markets remain on high alert for the next catalyst in what has become a highly unpredictable global environment.
