Regency FX give their monthly update on developments in the foreign exchange markets. The foreign currency market in April 2025 was characterised by heightened volatility, driven by U.S. trade policy uncertainties, divergent central bank actions, and geopolitical tensions. The U.S. dollar weakened significantly, hitting multiyear lows against major currencies like the euro and Swiss franc, while the Japanese yen and emerging market currencies experienced mixed performance.

Below is a comprehensive review of the key trends, currency movements, and influencing factors in the FX market during this period.

Key Currency Movements

U.S. Dollar (USD)

• Performance: The U.S. dollar declined by approximately 4% against the euro, with the Dollar Index dropping below 98.5, a three-year low. It weakened to $1.1363 against the euro, below 141 against the yen, and neared a 14-year low versus the Swiss franc.
• Drivers: Uncertainty surrounding President Trump’s tariff policies, coupled with a softening in trade rhetoric and positive U.S.-China trade talks, pressured the dollar. Despite a hawkish Federal Reserve outlook (two rate cuts projected for 2025), cooling U.S. economic data, including a PMI of 51.2, contributed to the dollar’s weakness.
• Market Sentiment: The dollar’s decline reflected a shift in investor confidence, with tariff-related fears overshadowing the Fed’s relatively tight policy stance.

Euro (EUR)

• Performance: The euro rallied strongly, climbing from 1.0811 in March to around 1.1363 by late April against the dollar.
• Drivers: The European Central Bank (ECB) cut its key policy rate to 2.50% in March, continuing its easing cycle, but political instability in France and Germany raised concerns about the eurozone’s economic outlook. Weak GDP and CPI data tempered gains, yet the euro benefitted from a broadly weaker dollar.
• Challenges: Political risks and ongoing ECB balance sheet reduction posed downside pressures, limiting the euro’s upside potential.

Japanese Yen (JPY)

• Performance: The yen weakened to 143 against the dollar, reversing earlier gains, as trade tensions eased and the dollar strengthened in some sessions.
• Drivers: Tokyo’s core inflation hit a two-year high of 3.4%, bolstering expectations for Bank of Japan (BoJ) rate hikes by January 2026. However, global trade uncertainties and potential equity market corrections kept the yen volatile.
• Outlook: USD/JPY remained sensitive to Japan’s interest rate trajectory and U.S. tariff developments.

Other Major Currencies

• British Pound (GBP): The pound rose to $1.3325, up 0.55%, benefiting from a weaker dollar and resilient UK retail sales. Analysts suggested GBP could outperform in Q2 2025 if the UK navigates U.S. tariffs effectively.
• Swiss Franc (CHF): The franc hit a decade high, reinforcing its safe-haven status amid global uncertainties.
• Iranian Rial (IRR): The rial plummeted to a record low of 1,043,000 to $1, driven by escalating U.S.-Iran tensions.

Major Influences

1. U.S. Trade Policy:
   1. President Trump’s tariff rhetoric and subsequent softening, alongside US-China trade talks, created significant market volatility. China’s emergency plans to counter potential tariffs and the UK’s relative resilience shaped currency movements.
2. Central Bank Policies:
   1. The Federal Reserve’s decision to hold rates steady and reduce quantitative tightening in March set a hawkish tone, but weak U.S. data undermined the dollar.
   1. The ECB’s rate cuts and balance sheet reduction signalled continued easing, while the BoJ’s inflation-driven rate hike expectations supported the yen.
   1. The PBoC’s interventions ensured yuan stability, countering tariff-related pressures.
3. Economic Data:
   1. Weak U.S. business activity (PMI at 51.2), rising UK retail sales, and Japan’s high inflation were key data points influencing market sentiment.
   1. • The Eurozone’s weak GDP and CPI data highlighted economic challenges, impacting the euro’s trajectory.
4. Geopolitical Risks:
   1. Middle East tensions, Russia-Ukraine conflicts, and political changes in France and Germany added to market uncertainty, boosting safe-haven currencies like the Swiss franc.

April 2025 was a turbulent month for the foreign currency market, with the U.S. dollar’s weakness against major currencies like the euro and Swiss franc dominating headlines. Trade policy uncertainties, central bank divergences, and geopolitical risks drove significant volatility, while economic data and technological advancements shaped trading dynamics. Looking ahead, the FX market is likely to remain sensitive to U.S. tariff developments, central bank policies, and global economic indicators, with the euro, yen, and emerging market currencies poised for further shifts in Q2 2025.

Currency ranges in March.

GBP/EUR

High: 1.2000 on April 2, 2025

Low: 1.1468 on April 11, 2025

GBP/USD

High: 1.3443 on April 28, 2025.

Low: 1.2718 on April 7, 2025.

GBP/AUD

High: 2.1571 on April 7, 2025.

Low: 2.0487 on April 2, 2025

EUR/USD

High: 1.1560 on April 21, 2025.

Low: 1.0789 on April 1, 2025.

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