Forex News:Dollar Declines ,Euro Stabilizes Amid U.S. Auto Tariff Concerns and more
Dollar Slips as Euro Stabilizes Following U.S. Auto Tariff Announcement
The U.S. dollar edged lower on Thursday, while the euro found stability near a three-week low after the Trump administration announced a 25% tariff on imported cars. The move has raised concerns about a potential trade war, though market reaction remained subdued.
As of 05:05 ET (09:05 GMT), the U.S. Dollar Index dipped slightly to 104.077, retreating from a three-week high recorded in the previous session.
Muted Market Reaction to Tariffs
Despite the hefty import duties, the currency market’s response has been relatively restrained. The U.S. imported $474 billion in automotive products in 2024, including $220 billion in passenger cars, indicating that the economic impact could be significant.
Analysts at ING suggested that “tariff fatigue” may be a factor, with traders already pricing in the potential economic consequences. Additionally, speculation that next week’s reciprocal tariffs could be more lenient has kept market movements in check.
“Investors appear to be shifting their focus from the announcement itself to its longer-term effects on business sentiment and consumer confidence,” ING noted. “The real test will be in upcoming economic data, particularly business investment and consumption figures in the second quarter.”
With worries growing that the tariffs may slow U.S. economic growth and stoke inflation, traders are now awaiting the fourth-quarter GDP report and weekly jobless claims data, which could provide further insights into the economy’s trajectory.
Euro Rebounds, Pound Gains Strength
The euro recovered slightly, with EUR/USD rising 0.2% to 1.0774, bouncing off its earlier three-week low. Despite the U.S. being a key export market for European carmakers who shipped approximately 800,000 vehicles to the U.S. last year the single currency held firm.
“The key question now is how Europe will respond,” ING added. “A strong retaliatory move could escalate tensions and weigh on the euro in the coming weeks.”
Meanwhile, the British pound strengthened, with GBP/USD climbing 0.3% to 1.2925. The recovery follows a budget update from U.K. Finance Minister Rachel Reeves, who revised spending plans to reassure investors. Additionally, U.K. inflation data showed a decline from 3.0% in January to 2.8% in February, easing pressure on the currency.
Asian Markets Remain Cautious
In Asia, the Japanese yen saw little movement, with USD/JPY trading at 150.57, while USD/CNY slipped 0.1% to 7.2639. Investors remained cautious ahead of the April 2 deadline, when further U.S. tariff announcements are expected.
As global markets assess the economic fallout of the new trade measures, all eyes remain on upcoming U.S. economic data and potential retaliatory steps from Europe and Asia.
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