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The U.S. dollar edged lower on Thursday, while the euro remained near a three-week low, as markets reacted to the Trump administration’s new 25% tariffs on imported automobiles. Investors are weighing the potential economic impact of a global trade war and the upcoming U.S. GDP report.
Dollar Index Dips After Hitting Three-Week High
- Dollar Index (DXY): 104.077 (-0.1%) at 09:05 GMT.
- The greenback retreated after touching a three-week high in the previous session.
While the currency market reaction was muted, analysts noted that the U.S. imported $474 billion worth of automotive products in 2024, including $220 billion in passenger cars.
“The market may be experiencing tariff fatigue, and traders are waiting to see the real economic impact,” ING analysts said.
Euro Holds Near Recent Lows
- EUR/USD: +0.2% to 1.0774, rebounding slightly from a three-week low.
- Concerns over Europe’s response to U.S. tariffs remain high.
ING analysts warn that if the EU retaliates, Washington could respond with further levies, raising fears of an escalating trade war that would be bearish for the euro.
British Pound Recovers
- GBP/USD: +0.3% to 1.2925, bouncing back after the sharp drop in the previous session.
- The recovery follows finance minister Rachel Reeves’ fiscal update, in which she trimmed spending plans to reassure investors.
- U.K. inflation slowed to 2.8% in February from 3.0% in January, easing concerns about aggressive rate hikes.
Asian Currencies Steady
- USD/JPY: Unchanged at 150.57.
- USD/CNY: Down 0.1% to 7.2639.
Asian currency markets remain cautious ahead of Trump’s April 2 deadline, as investors brace for potential new tariff announcements.
