Forex Today: US Dollar remains fragile as focus shifts to data releases
Here is what you need to know on Wednesday, March 5:
The US Dollar (USD) continued to weaken against its rivals on Tuesday and the USD Index slumped to its weakest level since early December, pressured by growing concerns over an economic slowdown. Early Wednesday, the USD struggles to find demand as the market focus shifts to ISM Services PMI and ADP Employment Change data for February.
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 weakest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -2.52% | -1.78% | -0.54% | -0.32% | -1.07% | -1.22% | -1.47% | |
| EUR | 2.52% | 0.65% | 1.80% | 2.06% | 1.38% | 1.15% | 0.90% | |
| GBP | 1.78% | -0.65% | 1.27% | 1.41% | 0.74% | 0.50% | 0.25% | |
| JPY | 0.54% | -1.80% | -1.27% | 0.43% | -0.49% | -0.64% | -0.95% | |
| CAD | 0.32% | -2.06% | -1.41% | -0.43% | -0.60% | -0.90% | -1.15% | |
| AUD | 1.07% | -1.38% | -0.74% | 0.49% | 0.60% | -0.24% | -0.49% | |
| NZD | 1.22% | -1.15% | -0.50% | 0.64% | 0.90% | 0.24% | -0.25% | |
| CHF | 1.47% | -0.90% | -0.25% | 0.95% | 1.15% | 0.49% | 0.25% |
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).
Following Monday's sharp decline, the USD Index lost nearly 1% on Tuesday. While addressing the Congress in the late American session, US President Donald Trump reiterated that they will impose tariffs on products not made in the US. Meanwhile, during a televised interview on Fox News, US Commerce Secretary Howard Lutnick hinted that Trump may be preparing to pivot on his own tariffs less than 48 hours after imposing them. Although these comments failed to help the market mood improve, the USD failed to find a foothold. On Tuesday, the Dow Jones Industrial Average (DJIA) and the S&P 500 indexes both lost over 1%. Later in the day, the US economic calendar will also feature Factory Orders data for January and the Federal Reserve (Fed) will publish its Beige Book.
During the Asian trading hours, the data from Australia showed that the Gross Domestic Product (GDP) expanded at an annual rate of 1.3% in the fourth quarter. This reading followed the 0.8% expansion recorded in the previous quarter and surpassed the market expectation of 1.2%. Meanwhile, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said early Wednesday that the measures of global trade uncertainty were at 50-year highs. After rising more than 0.7% on Tuesday, AUD/USD fluctuates in a tight channel above 0.6250 early Wednesday.
Bank of Japan (BoJ) Deputy Governor Shinichi Uchida said on Wednesday that he doesn't have a preset idea in mind on the pace of future rate hikes. "It is not as if we will be raising rates at each policy meeting," he added. After dropping to its weakest level since early October near 148.00 on Tuesday, USD/JPY staged a decisive rebound and was last seen trading above 149.50.
EUR/USD preserved its bullish momentum on Tuesday and gained about 1.3% on the day. The pair clings to small daily gains and trades comfortably above 1.0600 in the European morning on Wednesday.
GBP/USD extended its rally and rose more than 0.7% on Tuesday. The pair stays in a consolidation phase at around 1.2800 early Wednesday. Later in the day, Bank of England (BoE) Governor Andrew Bailey will testify before the Treasury Select Committee.
Gold managed to build on Monday's gains and climbed toward $2,930 before retreating slightly on Tuesday. At the time of press, XAU/USD was moving sideways below $2,920.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Author
Eren Sengezer
FXStreet
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.
