The euro dropped to a three-week low on Thursday as U.S. President Donald Trump announced new tariffs. The 25% tariff on imported cars and light trucks will take effect next week. This policy has raised concerns about economic growth and inflation.
The forex market showed a muted reaction to the announcement. The euro slipped by 0.07%, trading at $1.0747 after hitting $1.0733 earlier. Meanwhile, the Japanese yen remained stable at 150.445 per dollar.
The U.S. dollar index, which tracks the currency against six major rivals, stood at 104.61. This level is close to the three-week high recorded in the previous session.
In 2024, the U.S. imported $474 billion worth of automotive products. The main suppliers include Mexico, Japan, South Korea, Canada, and Germany. Investors fear the tariffs will lead to higher prices and slower economic growth.
The Mexican peso experienced a decline in value, depreciating by more than 0.5% in the foreign exchange market. This weakening resulted in the peso trading at a rate of 20.2222 against each U.S. dollar. In a parallel movement, the Canadian dollar also saw a reduction in its strength relative to the U.S. dollar. The Canadian dollar softened to a level of 1.429 per U.S. dollar. It's worth noting that this softening occurred after the Canadian dollar had reached its highest value in a month during the previous trading session, indicating a recent peak before the current decline. The peso's weakening represents a slight shift in its exchange rate, while the Canadian dollar's movement reflects a reversal from a recent period of stronger performance.
Trump has exempted auto parts that comply with the U.S.-Mexico-Canada Agreement (USMCA). However, analysts believe this move signals broader changes in global trade policies.
According to financial expert Kyle Rodda, Trump’s trade strategy may continue evolving. Investors are now awaiting further details on reciprocal tariffs, expected next week.
The new auto tariffs have sparked uncertainty in the forex market, especially the Euro with three-week low. Traders are closely monitoring potential retaliatory actions from U.S. trading partners. Stay updated with the latest forex market news and insights by visiting our website: Click here.
The euro fell to a three-week low after Trump announced a 25% auto tariff. Learn how this impacts forex markets and global trade.
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