The US dollar gained strength against both the Euro and the Japanese Yen on Wednesday, as traders closely monitored potential tariffs set to be announced by President Donald Trump next week. Market participants were weighing whether these tariffs would be more lenient than expected, with concerns over their impact on global growth and inflation persisting. Meanwhile, the British pound fell to a two-week low, largely driven by lower-than-expected inflation, following a fiscal statement from British Finance Minister Rachel Reeves.

The greenback’s upward movement was also supported by a surprise increase in durable goods orders for February, which added to the positive sentiment. However, uncertainty surrounding the upcoming tariff announcements remained a key driver of market volatility. Investors are particularly focused on whether the planned levies on trading partners will be harsher than anticipated, which could potentially hurt global trade and economic growth.

Experts, such as Steve Englander of Standard Chartered Bank, noted that traders are keen to avoid market disruption ahead of Trump’s formal tariff announcement, but some believe the eventual tariffs may be more aggressive than the market is currently pricing in. Trump recently signaled that automobile tariffs are imminent, although not all of the threatened tariffs will be imposed immediately, with some countries potentially receiving exemptions.

Despite tariff concerns, the Euro has struggled to gain traction against the dollar, marking its sixth consecutive day of decline. The European Union’s efforts to avoid steep US tariffs on its goods, through talks with Trump’s trade officials, appeared to be inconclusive. Additionally, Bank of America reported an increase in selling of Euros by sovereign wealth funds and central banks, signaling a shift in market dynamics in favor of the US dollar.

source: daily post