The Tariff Truce Extension and the Safe-Haven Reversal: Why the US Dollar Stays Strong
Published: September 2026 | By: Aaron Zhang , Managing Director at Currency Mart Inc. Diplomatic Relief and the Sell-the-Fact Trade When high-level trade delegations meet in Washington and announce an extension of tariff deadlines, foreign exchange desks typically prepare for an immediate shift in risk sentiment. In classical currency theory, political summits that lower cross-border friction trigger a safe-haven reversal. Capital leaves defensive instruments like the US dollar, Swiss franc, and gold, rotating into export currencies and emerging market equities. The agreement between Washington and Beijing to push the tariff truce deadline from November 10, 2026, to January 10, 2027, provided an initial bounce for global risk assets. The relief rally in currency markets faded quickly. The US Dollar Index (DXY) found immediate buying support above 104.50, leaving traders to ask why a diplomatic breakthrough failed to generate a deeper dollar sell-off. Th...