The US Dollar remains under pressure on Monday, following scrutiny over recent developments related to US tariffs. Eurostat will release February Retail Sales data, while no high-impact economic data is expected from the US later in the day.
Recent US employment data showed Nonfarm Payrolls increased by 228,000 in March, exceeding expectations. Despite this, the USD Index fell over 1% for the week, with the Dollar particularly weak against the Swiss Franc.
Euro Usd And Industrial Production
EUR/USD declined nearly 0.8% on Friday but gained about 1.2% for the week, trading around 1.1000 on Monday. Meanwhile, Germany’s Industrial Production contracted by 1.3% in February.
AUD/USD dropped sharply on Friday, losing about 4% for the week and briefly touching a five-year low below 0.5950. Concerns surrounding the Chinese economy were cited as a key factor in the AUD’s decline.
USD/JPY ended Friday positively but lost nearly 2% for the week. The pair trades below 145.50 amidst bearish pressure, influenced by remarks from Japanese officials.
GBP/USD experienced a loss of over 1.5% on Friday, wiping out weekly gains and stabilising around 1.2900 early Monday. Gold fell nearly 2.5% on Friday, reaching a low of $2,970 before recovering above $3,000.
Tariffs are customs duties designed to protect local industries by making imported goods less competitive. President Trump’s tariff strategy targets Mexico, China, and Canada, accounting for 42% of total US imports.
Impact Of Tariffs On Us Dollar
The downward pressure on the US Dollar amid renewed concerns over tariffs has not gone unnoticed. The recent move to revisit and potentially extend trade protection of this kind shifts focus away from purely economic data and brings policy decisions back into the spotlight. With the latest jobs figures showing strength in headline payroll growth—March’s print of 228,000 surpassing forecasts—it’s perhaps counterintuitive to witness USD weakness. However, markets are clearly embedding more pricing power into risk-linked themes like protectionism.
The Swiss Franc’s outperformance, despite no new domestic data, reflects its status as a default harbour during periods where macro uncertainty and trade developments collide. From our perspective, this means chillier implications for dollar-linked volatility premiums. Consider how index weakness persisted last week while yields held up—suggesting a more structural repricing of macro risk, not just knee-jerk reaction to data oscillations.
Turning to the euro: though EUR/USD closed Friday notably lower, the broader weekly gain demonstrates resilience beneath the headline. The pair regaining ground around the 1.1000 handle, particularly as German Industrial Production fell by 1.3%, reveals markedly less sensitivity to industrial softness. What’s likely occurring is a greater discounting of euro area exposure to global flows—strength in periphery demand and retail sector breadth may offset drops in output. Traders should recognise such transitions between production-led signals and consumption-led resilience.
The Australian Dollar’s performance, on the other hand, was sharper and more mechanical. A 4% weekly slide with a flirtation below long-standing support at 0.5950 tells us sentiment is driving the AUD now, not domestic indicators. The Chinese economy’s drag acts like gravity on Aussie valuation. If that weight persists, and Chinese credit or fixed asset data underperform this month, expect volatility on commodity-linked crosses to swell.
In Japan, where USD/JPY finished the week down by nearly 2%, it’s not just a reaction to broad dollar weakness. Clearer, more persistent signals are emerging from Tokyo, where policymakers have grown vocal about yen revaluation—reminding markets of their intervention toolbox. The pair now hovers below 145.50, where sellers have been adding pressure. As this plays out, risk-reward calculus for positioning on retests of 147 or higher grows thinner. We continue to lower exposure near official lines in the sand, especially if macro surprises soft-pedal.
As for GBP/USD, an aggressive Friday pullback wiped out four days of gains in one move. With sterling back around 1.2900 early in the week, there’s a narrower band of comfort. Valuations this high remain sensitive to downside surprises, especially with no major UK releases ahead. Short-term speculators need to re-check exposure levels for event gaps or unhedged positions. The pricing suggests too much optimism was front-run.
Gold’s slip toward $2,970 before reclaiming ground above $3,000 taps into trader views on real yield differentials and inflation hedging. The precious metal’s failure to hold mid-week highs confirms sensitivity to yield curve re-steepening—not just USD fluctuations. We adjust our immediate downside risk framing accordingly, watching 10-year breakeven inflation expectations for short-term bias.
Finally, the tariff mechanics themselves are no pure abstraction. With measures affecting up to 42% of import volumes, and trade partners including Mexico, China, and Canada directly named, equities and options pricing in sectors like autos, tech hardware, and agriculture should be reassessed for potential margin compression. This is not mere policymaking theatre—it carries pricing implications that ripple through carry trades, hedging strategies, and forward volatility expectations.
We treat any escalated commentary or draft policy movement on the topic as actionable, particularly when released into low-volume sessions. Directional exposure needs to be nimble and layered. Risk management decisions must include scenario test levels where spreads blow out or implied vols spike, especially in commodity and Asian FX baskets.
