The US dollar fell to its lowest levels since early December, with the dollar index ($DXY) reaching new lows, as traders reacted to concerns over tariffs and potential economic impacts. The Japanese yen strengthened significantly against the dollar, advancing past 148 yen per dollar, the strongest level in two and a half months. US consumer sentiment declined sharply in February, with the University of Michigan's Consumer Sentiment Index falling to 64.7 from 71.1 in January, a 10% drop and the lowest reading since November 2023. Long-term inflation expectations surged to 3.5%, the highest rate since 1995, while one-year inflation expectations rose to 4.3%. The survey showed that 40% of consumers mentioned tariffs, up from 27% in January. “Tariffs and immigration policy are really starting to squeeze every market in this country,” said National Association of Home Builders CEO Jim Tobin. The housing market showed signs of weakness, with construction of new homes plummeting in January. Housing starts decreased by 9.8% to an annualized pace of 1.37 million, while single-family starts fell 8.4%. Existing home sales declined by 4.9% to 4.08 million units in January, falling more than expected. US stock markets fell sharply, with the Dow Jones Industrial Average tumbling over 800 points. The S&P 500 erased almost all its gains since President Trump took office last month. Investors reacted to concerns about the economy, rising inflation expectations, and the potential impact of President Donald Trump's proposed tariffs on businesses and consumers. Japanese stocks were also affected, with the Nikkei 225 experiencing declines due to the stronger yen and weak US economic data. The yen's appreciation to the 148 range against the dollar represents its strongest level in over two months.