Forex Today: US Dollar under pressure as tariff headlines dominate markets
Here is what you need to know on Monday, April 7:
After staging a rebound to end the previous week, the US Dollar (USD) stays under pressure on Monday as investors scrutinize the latest developments surrounding US tariffs. Eurostat will publish Retail Sales data for February and the US economic calendar will not feature any high-impact data releases in the second half of the day on Monday.
The upbeat March employment data from the US and Federal Reserve (Fed) Chairman Jerome Powell's relatively hawkish comments helped the USD stay resilient against its rivals heading into the weekend. Nevertheless, the USD Index lost more than 1% for the week still.
US Dollar PRICE Last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.70% | 0.32% | -3.04% | -0.46% | 4.77% | 2.85% | -3.55% | |
| EUR | 1.70% | 2.16% | -1.42% | 1.30% | 6.66% | 4.67% | -1.84% | |
| GBP | -0.32% | -2.16% | -3.48% | -0.79% | 4.41% | 2.49% | -3.87% | |
| JPY | 3.04% | 1.42% | 3.48% | 2.69% | 8.12% | 6.14% | -0.59% | |
| CAD | 0.46% | -1.30% | 0.79% | -2.69% | 5.28% | 3.33% | -3.10% | |
| AUD | -4.77% | -6.66% | -4.41% | -8.12% | -5.28% | -1.85% | -7.96% | |
| NZD | -2.85% | -4.67% | -2.49% | -6.14% | -3.33% | 1.85% | -6.23% | |
| CHF | 3.55% | 1.84% | 3.87% | 0.59% | 3.10% | 7.96% | 6.23% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The US Bureau of Labor Statistics reported on Friday that Nonfarm Payrolls rose by 228,000 in March, beating the market expectation of 135,000 by a wide margin. Later in the day, Fed Chairman Jerome Powell said US President Donald Trump's tariffs are bigger than expected, and they risk higher inflation and slower growth. "The Fed's obligation is to make certain that a one-time increase in price levels doesn't become an ongoing inflation problem," he added.
Trump said over the weekend that unless they solve the trade deficit with China, he will not be making a deal. In the meantime, US Commerce Secretary Howard Lutnick confirmed on Sunday that the tariffs would not be postponed and the policy will remain in place for days and weeks.
EUR/USD fell nearly 0.8% on Friday but gained about 1.2% for the week. Early Monday, the pair stays in positive territory at around 1.1000. European Central Bank (ECB) policymaker Yannis Stournaras warned on Monday that Trump tariffs risk a large euro-area demand shock, per the Financial Times. Earlier in the day, the data from Germany showed that Industrial Production contracted by 1.3% on a monthly basis in February, following the 2% expansion reported in January.
AUD/USD declined sharply on Friday and lost about 4% for the week. The pair extended its slide during the Asian trading hours and touched its weakest level in five years below 0.5950 before recovering to the 0.6000 area. Australian Treasurer Jim Chalmers said that the fall in the Australian Dollar (AUD) was largely a result of concerns about the Chinese economy, and added that it also reflected the fact that markets are now expecting around four interest rate cuts in Australia this calendar year.
USD/JPY closed in positive territory on Friday but lost nearly 2% for the week. The pair stays under bearish pressure at the beginning of the week and trades slightly below 145.50, where it's losing more than 1% on the day. Japanese Chief Cabinet Secretary Yohsimasa Hayashi said on Monday that they are closely watching market moves with a sense of urgency. Meanwhile, Japanese Prime Minister Shigeru Ishiba said late Sunday that Japan would continue pressing the US to lower tariffs on Japanese goods, but acknowledged that progress was unlikely to come overnight.
GBP/USD lost over 1.5% on Friday and erased all of its weekly gains. Following a bearish opening to the week, the pair recovers slightly and trades little changed on the day at around 1.2900 in the European morning.
After setting a new record high midweek, Gold staged a deep correction and lost nearly 2.5% on Friday. XAU/USD declined sharply in the early Asian session on Monday and touched its weakest level since mid-March at $2,970 before rebounding above $3,000 by the European morning.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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