- EUR/USD moves higher to near 1.0820 ahead of US President Trump’s announcement of reciprocal tariffs.
- Anxiety over Trump’s tariffs has dampened the confidence of US businesses and households.
- Soft Eurozone HICP data paves the way for more ECB interest rate cuts.
EUR/USD rises to near 1.0820 during North American trading hours on Wednesday. The major currency pair gains as the US Dollar (USD) declines before the announcement of reciprocal tariffs by United States (US) President Trump at 20:00 GMT. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near 104.00.
Investors expect Trump’s tariffs will also be unfavorable to the US economy, considering consumer and business confidence deterioration. The ISM Manufacturing Purchasing Managers Index (PMI) also showed on Tuesday that the business activity contracted in March after expanding for two straight months. “Demand and production retreated, and destaffing continued, as panellists’ companies responded to demand confusion,” ISM Manufacturing Chair Timothy Fiore said.
US President Trump’s fresh suite of tariffs is expected to become effective immediately after the announcement. Such a scenario will upend the global trading system, making products of countries that will attract higher tariffs less competitive. Higher import duties will also result in a slowdown in global business investment as firms would struggle to ascertain the demand outlook of their products.
The comments from US Treasury Secretary Scott Bessent on Tuesday also indicated that the President will impose the highest level of levies on his trading partners and stated that targeted countries could pass them by meeting US demands, specifically by diminishing rates on imports from the US.
Meanwhile, the ADP Employment Change data for March has come in better than expected. US private employers added 155K workers, significantly higher than estimates of 105K and the prior release of 84K, revised higher from 77K.
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