Currency traders appear to be just as perplexed as the Trump Administration when it comes to the dollar.

With the greenback's fortunes ebbing and flowing as the White House sends mixed signals on its preferences for the currency's strength, sleep has been hard to come by. Even the administration's policy prescriptions have kept traders guessing. More infrastructure spending, revitalized manufacturing and lower taxes should spell faster growth and inflation — and a stronger dollar. But the focus lately has been on restrictive trade and immigration measures, dimming growth prospects —  and sending the greenback into a tailspin.

While Trump's pick for Treasury secretary, Steve Mnuchin, seemed in early December to fall in line with the long-held policy of the government supporting a stronger dollar, since then things have become much less clear. The president has since said China and Japan had unfairly devalued their currencies, while his trade adviser Peter Navarro said the euro was "grossly undervalued." And Mnuchin himself has since seemed to adjust, saying in January that an "excessively strong dollar" could have a negative short-term effect on the economy.

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