Dollar Holds Steady as Markets Await Trump’s Reciprocal Tariffs

The U.S. dollar remained stable on Tuesday as investors prepared for new reciprocal tariffs set to be announced by President Donald Trump on Wednesday.

Market Focus on U.S. Economic Data

Investors are closely watching the U.S. Job Openings and Labor Turnover Survey (JOLTS) and the ISM Manufacturing Index, both due later in the session. These reports could provide further insights into how trade policy uncertainty is impacting the U.S. economy.

• Trump announced late Sunday that all countries will face new tariffs this week, without offering details.
• Reports suggest the White House is considering a 20% tariff on most U.S. imports (Washington Post).

Dollar and Currency Market Moves

• The U.S. Dollar Index (DXY) was up 0.03% at 104.19.
• Euro (EUR/USD) dropped 0.1% to $1.0805, after gaining 4.5% in Q1, its strongest quarterly rise since Q4 2022.
• Japanese Yen (USD/JPY) strengthened 0.3% to 149.50, with the yen up nearly 5% in Q1 amid expectations of further Bank of Japan (BOJ) rate hikes.

European Trade and ECB Outlook

• European Commission President Ursula von der Leyen stated that the EU is open to trade negotiations but will retaliate if necessary.
• ECB rate cut expectations have increased due to tariff fears and weak economic data.
• Markets now price in an 80% chance of an ECB rate cut in April, as policymakers express mixed views.

Geopolitical Tensions: China-Taiwan Drills

The Chinese military conducted drills around Taiwan on Tuesday, heightening geopolitical concerns.

Meanwhile, Japan’s business sentiment weakened in Q1, reflecting how trade tensions are already affecting its export-driven economy and complicating the BOJ’s next move.

As markets brace for Trump’s tariff announcement, currency and bond markets remain volatile, with global investors weighing potential policy shifts across the U.S., Europe, and Asia.