Forex Today: US Dollar under heavy pressure as trade war deepens
Here is what you need to know on Thursday, April 3:
The US Dollar (USD) suffers heavy losses against its major rivals on Thursday as markets assess how US President Donald Trump's tariffs could impact the economic activity. The European Central Bank (ECB) will publish Monetary Policy Meeting Accounts and the US economic calendar will feature weekly Initial Jobless Claims and March ISM Services PMI data later in the day.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.25% | -1.48% | -1.78% | -0.92% | -0.27% | -0.87% | -1.29% | |
| EUR | 1.25% | -0.13% | -0.52% | 0.37% | 1.08% | 0.43% | 0.00% | |
| GBP | 1.48% | 0.13% | -0.39% | 0.55% | 1.21% | 0.59% | 0.16% | |
| JPY | 1.78% | 0.52% | 0.39% | 0.90% | 1.61% | 0.99% | 0.42% | |
| CAD | 0.92% | -0.37% | -0.55% | -0.90% | 0.71% | 0.06% | -0.38% | |
| AUD | 0.27% | -1.08% | -1.21% | -1.61% | -0.71% | -0.62% | -1.07% | |
| NZD | 0.87% | -0.43% | -0.59% | -0.99% | -0.06% | 0.62% | -0.45% | |
| CHF | 1.29% | -0.01% | -0.16% | -0.42% | 0.38% | 1.07% | 0.45% |
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).
The Trump administration announced on "Liberation Day" that they will impose a 10% baseline tariff, effective April 5, on all imports to the US. United Kingdom, Australia and Saudi Arabia will be among the countries that will only face this base rate. Canada and Mexico will be exempt from this 10% increase. Officials will also impose higher reciprocal tariffs, which will go into effect on April 9, on about 60 countries they describe as "worst offenders." The European Union, China and Japan will face 20%, 54% and 24% tariffs, respectively, under this new regime. Additionally, Trump confirmed that they will impose 25% tariffs on all foreign-made automobiles.
Following the tariff announcements, the USD Index fell 0.5% on Wednesday and extended its slide during the Asian trading hours on Thursday. At the time of press, the USD Index was down more than 1% on the day near 102.50.
European Commission President Ursula von der Leyen responded to US President Donald Trump’s reciprocal tariffs early Thursday, calling them a major blow to the world economy. "We are preparing a further package of measures to protect our interests," she added. EUR/USD gathers bullish momentum and trades at its highest level since early October above 1.0960 in the European session.
GBP/USD rallies higher and trades at its strongest level in six months above 1.3100.
USD/CAD loses more than 0.5% on the day and trades below 1.4200, while USD/MXN falls about 0.7% on the day. Canadian Prime Minister Mark Carney said late Wednesday that the country will fight Trump's tariffs with countermeasures
After posting small losses on Wednesday, USD/JPY declines sharply and trades near 147.00, losing nearly 1.5% on a daily basis.
Gold touched a new record-high above $3,160 in the Asian session but lost its traction. At the time of press, XAU/USD was trading marginally lower on the day at $3,125.
Earlier in the day, the data from China showed that the Caixin Services PMI improved to 51.9 in March from 51.4 in February. China’s Commerce Ministry reiterated on Thursday that it firmly opposes US tariffs and will "resolutely take countermeasures to safeguard its rights and interests.” AUD/USD struggles to benefit from the broad-based selling pressure surrounding the USD and trades marginally higher on the day at around 0.6300.
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.
