When America starts its protectionist policy, what could happen to the forex market?

Once Trump was elected, it created huge volatility in the forex market that we saw a sharp appreciation in the Japanese currency as well as a sharp depreciation in many Latin American countries' currencies. As the value of a currency is largely determined by the country's trading position, economic performance, and the market expectations about these factors' future changes.

When Trump comes to power and starts his protectionist policy, it will affect all countries' trade positions around the world, in some countries, their economies could be affected more than others' as their economies have greater dependency on the American economy. There is another factor about America that following the protectionist policy, the American inflation rate could increase.

The countries, which are expected to have relatively lower inflations than America and/or improvement in trade positions or relatively smaller decrease in exports, are highly likely to have their currencies appreciating. These countries could include the Eurozone, Japan and even Canada, whose economy, though, has a large dependence on the American economy, since America has a long history of a good relationship with Canada, may not be affected as badly as others'. Vice versa, the countries, which are expected to have relatively higher inflation than American and/or a huge decrease in imports, are likely to have their currencies depreciating. This has been shown clearly by the forex market behavior once Trump was elected.

In terms of the US dollar, I think US dollar may appreciate in the future. Though the American inflation rate may increase after the protectionist policy is put into action, the possibility of a trade war in a global scale may damage many countries' economies and affect their governments' credit ratings, then the US dollar may become the most secure currency to hold, thus the value of the US dollar will increase against many other currencies which are considered to be risky.