The U.S. dollar strengthened on Thursday, rising above an 11-week low. Investors responded to President Donald Trump’s shifting stance on tariffs. While he suggested a 25% tariff on European goods, he also delayed planned levies on Canada and Mexico. These mixed signals fueled uncertainty in the forex market.
The euro remained stable after retreating from a one-month high of $1.0529. Traders were cautious as they awaited further developments. Additionally, political uncertainty in Germany contributed to the euro’s lack of momentum. Meanwhile, the Mexican peso hovered around 20.408, while the Canadian dollar struggled near a two-week low.
Trump initially set a March 4 deadline for Mexican and Canadian tariffs but later mentioned April 2 instead. However, a White House official confirmed that tariffs remained in place, pending further review. This lack of clarity kept forex traders hesitant.
Market analysts observed that Trump's unpredictable remarks often lead to short-term volatility. However, traders are now waiting for more substantial economic indicators before making significant moves. The dollar index edged higher to 106.56, recovering from its recent two-month low.
Recent data has raised concerns about U.S. economic growth and inflation. Business activity weakened, and consumer confidence dropped sharply in February. As a result, U.S. Treasury yields fell, fueling speculation that the Federal Reserve could cut rates twice in 2025.
The Japanese yen traded near 149.17, maintaining recent gains. A drop in U.S. Treasury yields has supported the yen. At the same time, expectations that the Bank of Japan may raise rates have added further support.
The British pound remained just below its recent two-month high of $1.2717. The Australian dollar and New Zealand dollar also struggled, reflecting a cautious global market sentiment.
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Dollar strengthens as Trump's shifting tariff messages fuel uncertainty. Traders react to market volatility while Fed rate cut forecast rise.
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