EUR/USD drops while USD/JPY and AUD/USD stabilize ahead of tariff deadline and inflation data
EUR/USD slips near 1.0775 as USD/JPY and AUD/USD steady ahead of key inflation and trade risks
The U.S. Dollar held firm against major peers on Friday, with EUR/USD retreating near 1.0775 as investors braced for the February PCE inflation report and next week’s U.S. auto tariff implementation. The Japanese Yen gained ground amid hawkish Bank of Japan commentary, while the Australian Dollar weakened slightly in response to global trade worries and domestic political developments.
EUR/USD slipped as markets grew cautious ahead of the U.S. core PCE inflation report and President Trump’s looming reciprocal tariffs set for April 2. The European Commission has vowed to respond with calibrated countermeasures, warning that the blanket 25% U.S. auto tariff will damage both EU and U.S. economies. German Chancellor Olaf Scholz criticized Trump’s decision as “a path of losers,” while ECB Vice President Luis de Guindos warned the tariffs could dampen growth even if inflationary effects prove temporary.
The pair remains supported above its 20-day EMA at 1.0760, though a break lower could open room toward 1.0630. Meanwhile, soft inflation prints from France and Spain contributed to the Euro’s muted tone.
EUR/USD, USD/JPY & AUD/USD price dynamics (Source: TradingView.)
Yen strengthens on strong inflation, BoJ hawkishness
USD/JPY retreated to around 150.7 after Tokyo’s core inflation jumped to 2.4% in March, beating forecasts. The Bank of Japan’s March policy minutes signaled continued rate hikes, supported by rising wages and consumer spending.
Policymakers see economic momentum holding, reinforcing the likelihood of additional tightening. However, investors remain wary of the impact of U.S. tariffs on Japanese exports, particularly autos.
Aussie under pressure ahead of RBA and national election
AUD/USD slipped below 0.63 as traders weighed the upcoming Reserve Bank of Australia policy decision and May 3 national elections. CPI data showed inflation easing to 2.4% in February, reducing urgency for further tightening. With trade tensions intensifying, the AUD may remain range-bound between 0.6240 and 0.6355 in the near term. Political headlines and the RBA’s tone next week could shift sentiment.
We previously noted that all three pairs—EUR/USD, USD/JPY, and AUD/USD—were entering pivotal zones ahead of upcoming central bank cues and trade policy shifts. This session reinforced that view, with Euro weakening on tariff fears, Yen supported by BoJ hawkishness, and Aussie caught in a macro-political mix.
