Euro price rebounds, yen surges, and Aussie tumbles amid global trade war
EUR/USD rebounds as global markets react to Trump's tariffs, yen strengthens, and Aussie tumbles
The euro rebounded against the U.S. dollar Monday, with EUR/USD climbing to the 1.1 mark after a soft open near 1.088. The recovery followed renewed U.S. dollar weakness, as markets digested the impact of U.S. President Donald Trump's sweeping tariff policy, which has sparked global recession fears.
The U.S. Dollar Index (DXY) fell to 104.4 amid broad-based risk aversion.Investors are increasingly concerned the U.S. economy may enter a mild recession. JPMorgan forecasts a 0.3% contraction in 2025 GDP, while Federal Reserve Chair Jerome Powell warned of "elevated risks" to growth and inflation.
Despite the dollar’s safe-haven status, the currency underperformed due to anticipated rate cut pressure if economic data deteriorates further. Eurozone officials, including ECB’s Isabel Schnabel, voiced worries about rising uncertainty, though the ECB is expected to continue its easing cycle. EUR/USD technicals show support at 1.0886, with resistance near 1.1214.
EUR/USD, USD/JPY & AUD/USD price dynamics (Source: TradingView.)
Yen surges on risk-off flows, AUD pressured by commodities and growth fears
The Japanese yen rallied past 146 per dollar, nearing six-month highs as traders flocked to traditional havens amid deepening global tensions. Trump’s reciprocal tariffs and subsequent retaliation from major economies have caused a sharp sell-off in equities and commodities.
Domestically, Japan reported stronger nominal wage growth, offering some economic optimism. The Bank of Japan remains on a tightening path, though global volatility clouds the outlook.
In contrast, the Australian dollar fell to $0.60—its lowest since the early pandemic—pressured by sliding commodity prices and mounting global slowdown risks. Prime Minister Albanese ruled out retaliatory tariffs against the U.S., citing limited exposure, but the broader impact on trade partners like China has hit the Aussie hard. Rate cut expectations have intensified, with markets pricing in 100 basis points of easing from the Reserve Bank of Australia this year.
Market attention will turn to Thursday’s U.S. CPI release, which could either confirm inflationary fears stemming from tariffs or ease concerns. Until then, macroeconomic uncertainty and global trade tensions will likely drive forex volatility across major pairs.
In earlier coverage, we highlighted that EUR/USD's structure was growing increasingly bullish after breaching prior resistance zones near 1.093. Today's rebound confirms continued upward momentum despite macro headwinds, while AUD/USD and USD/JPY follow the broader sentiment we've tracked around safe-haven flows and trade shocks.
