By Stefano Rebaudo and Chibuike Oguh

NEW YORK (Reuters) - The U.S. dollar weakened against safe-haven currencies including the yen and the Swiss franc while the euro strengthened on Wednesday as markets grappled with tit-for-tat measures by major countries in response to U.S. tariffs.

U.S. Treasuries were hit with new selling pressure on Wednesday, indicating that investors were dumping what they often consider to be their safest assets.

President Donald Trump's "reciprocal" tariffs on dozens of countries took effect on Wednesday, including massive 104% duties on Chinese goods.

China swiftly retaliated with an 84% tariff on U.S. goods from Thursday. EU countries also approved on Wednesday the bloc's first countermeasures against U.S. tariffs.

"Coming into the week, there was some hope the tariffs would be walked back or delayed but those hopes have been dashed and now the market is hoping for quick negotiations or renegotiations of trade deals," said Adam Button, chief currency analyst at ForexLive.

"At the same time, the US dollar is struggling and that's been sort of an overarching theme of the year so far."

U.S. Treasury Secretary Scott Bessent said in a Fox News interview that the U.S. still has a strong dollar policy.

The greenback was down 0.96% against the safe-haven yen to 144.85. It fell 1.04% versus the Swiss franc after hitting its weakest level since December 2023, at 0.83590.

Some analysts say that beyond the yen's relative safe-haven status, Japan's macroeconomic backdrop remains relatively strong and rate differentials are expected to continue to favour Japan.

The benchmark 10-year U.S. Treasury note yield jumped to a seven-week high, in what appeared to be large liquidations of the debt. The yield rose 10.8 basis points to 4.368% after hitting its highest level since February 20.

Some market participants believe that investors including hedge funds have been selling liquid assets such as U.S. government bonds to meet margin calls due to portfolio losses across asset classes.

Some hedge funds have offloaded stocks as the market plunge forces them to curtail trading using borrowed cash.

German conservatives under Friedrich Merz agreed a coalition deal with the centre-left Social Democrats (SPD) on Wednesday, helping to support the euro.

The single currency firmed 0.73% to $1.10350, creeping back towards last week's peak at $1.1147.

The dollar was down 0.64% versus the yuan offshore at 7.3782, after reaching an all-time high at 7.4288.

The People's Bank of China will not allow sharp yuan declines and has asked major state-owned banks to reduce U.S. dollar purchases, people with direct knowledge of the matter told Reuters on Wednesday.