01.04.2025
Jainam Mehta
Contributor
01.04.2025

Dollar, euro, and yen trade cautiously as markets await U.S. tariff announcement and key data releases

Dollar, euro, and yen trade cautiously as markets await U.S. tariff announcement and key data releases Major Forex pairs steady as traders brace for Trump’s reciprocal tariffs and economic data

Major Forex pairs traded within narrow ranges Tuesday as investors awaited the United States announcement of sweeping reciprocal tariffs. President Donald Trump confirmed late Monday that the planned levies, expected on Wednesday, will target all foreign nations, adding to concerns of global trade friction. 

This uncertainty, combined with diverging central bank outlooks, shaped the day’s price action across the dollar, yen, euro, and Australian dollar.

EUR/USD, USD/JPY and AUD/USD price dynamics (Source: TradingView.)

USD/JPY hovers near 150 as rate differential narrows

The Japanese yen struggled for direction despite an uptick in Tokyo inflation and the Bank of Japan’s Tankan survey revealing higher long-term inflation expectations. While these indicators could support further BoJ rate hikes, the broader sentiment was tempered by fears that Trump’s tariffs could hit Japanese exports, especially autos, prompting policy caution. 

USD/JPY held steady at nearly 150.00, failing to recover from Monday’s technical breakdown below a rising trend channel. A push above 150.25 could revive bullish interest, while a drop below 149.00 may trigger further weakness.

EUR/USD firm above $1.08 as dollar softens on growth concerns

The euro advanced slightly against the dollar, with EUR/USD trading near 1.0815 in early Europe. Investors digested Trump’s trade rhetoric while anticipating Eurozone inflation data and ECB President Christine Lagarde’s speech. 

Meanwhile, comments from Fed officials reinforced that the U.S. central bank remains cautious on rate cuts despite market pricing for two reductions in 2025. Economic uncertainty and falling Treasury yields have continued to weigh on the dollar, supporting the euro’s modest upside.

AUD/USD steadies after RBA decision and upbeat China data

The Australian dollar edged higher after the Reserve Bank of Australia held rates at 4.10% and maintained a cautious tone on future policy. RBA Governor Michele Bullock emphasized that a rate cut was not discussed, suggesting a wait-and-see approach. Meanwhile, better-than-expected manufacturing PMI data from China lent additional support to the Aussie. Still, global trade worries ahead of Trump’s tariff announcement limited gains. AUD/USD traded within a symmetrical triangle, with resistance near 0.6330 and support at 0.6225.

As previously noted, volatility around USD/JPY was likely to increase ahead of April’s key risk events, especially with narrowing rate differentials and geopolitical trade pressures. Today’s developments reaffirm that view, with trade risks likely to dictate near-term direction.

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