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Forex Today: US Dollar regains traction on renewed optimism about easing US-China tensions

Here is what you need to know on Friday, April 25:

Following Thursday's decline, the US Dollar (USD) gathers strength against its rivals early Friday as markets assess the latest headlines surrounding the US-China trade relations. Statistics Canada will release Retail Sales data for February later in the day and the University of Michigan will publish revisions to the Consumer Sentiment Index for April.

US Dollar PRICE This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD0.40%-0.03%0.96%0.16%-0.32%-0.69%1.84%
EUR-0.40%-0.57%0.55%-0.28%-0.91%-1.12%1.41%
GBP0.03%0.57%1.30%0.31%-0.33%-0.55%2.00%
JPY-0.96%-0.55%-1.30%-0.80%-1.40%-1.53%0.89%
CAD-0.16%0.28%-0.31%0.80%-0.61%-0.86%1.70%
AUD0.32%0.91%0.33%1.40%0.61%-0.20%2.34%
NZD0.69%1.12%0.55%1.53%0.86%0.20%2.58%
CHF-1.84%-1.41%-2.00%-0.89%-1.70%-2.34%-2.58%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

After losing 0.5% on Thursday, the USD Index edges higher toward 100.00 in the European morning on Friday. United States (US) President Donald Trump confirmed late Thursday that a meeting with Chinese officials took place earlier in the day. Additionally, Bloomberg reported, citing sources familiar with the matter, that China is mulling suspending its 125% tariff on some US imports including medical equipment, ethane, while discussing waiving the tariff for plane leases. US stock index futures rise between 0.1% and 0.5% in the European morning on Friday after Wall Street's main indexes registered strong gains on Thursday.

Following the Politburo meeting held early Friday, China noted that they will cut the Reserve Requirement Ratio (RRR) and interest rates in a timely manner. In the meantime, People's Bank of China (PBOC) Governor Pan Gongsheng said that they will implement a moderate and loose monetary policy to promote the development of the Chinese economy. After rising about 0.8% on Thursday, AUD/USD stays in a consolidation phase at around 0.6400 in the European morning on Friday.

Bloomberg News reported on Thursday that the European Central Bank (ECB) is preparing to revise its monetary-policy framework to allow for more agile responses to price shocks amid mounting global volatility. EUR/USD struggles to keep its footing and trades in negative territory at around 1.1350 to start the European session.

The UK's Office for National Statistics announced on Friday that Retail Sales rose by 0.4% on a monthly basis in March. This reading followed the 0.7% increase recorded in February and came in much better than the market expectation for a decrease of 0.4%. GBP/USD largely ignored these numbers and was last seen losing more than 0.2% on the day at around 1.3300.

Following a sharp two-day decline, Gold staged a rebound and gained nearly 2% on Thursday. Improving risk mood, however, caused XAU/USD to turn south once again on the last trading day of the week. At the time of press, the pair was testing $3,300, losing more than 1% on the day.

USD/JPY gains more than 0.6% on the day and trades at its highest level in 10 days near 143.50 in the European morning. Bank of Japan (BoJ) Governor Kazuo Ueda reiterated on Thursday that the Japanese central bank will continue to raise interest rates if underlying inflation converges toward its 2% inflation target as projected.

US-China Trade War FAQs

Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.

An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.

The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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