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Dollar gains as investors seek Trump’s full tariff plan

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EURUSD turned sideways around 1.0400 in Thursday’s European session as the US dollar gains ground.

The DXY Dollar Index, which tracks the greenback’s value against six major currencies, remains above the key level of 108.00 after rebounding from the two-week low of 107.75 seen on Wednesday.

The dollar bounces back as the market sentiment turns slightly cautious, with investors assessing the consequences of President Donald Trump’s tariffs on economic growth.

Trump has threatened 25% tariff hikes on Canada and Mexico, and 10% on China, which will come into effect on February 1. He also plans to impose tariffs on Europe after accusing the bloc of being “very, very bad to us”.

Trump’s tariff hike approach appears to be more gradual than what market participants had anticipated. However, they would still be unfavourable to global economic growth.

On Wednesday, European Central Bank President Christine Lagarde commented on CNBC that Trump’s decision not to swiftly impose tariffs was a “smart approach” because blanket levies don’t necessarily give you the “results that you expect.”

Lagarde warned that Europe must “anticipate what will happen” and be “prepared in order to respond,” as Trump’s tariffs would be “selective” and “focused.”

EURUSD chart by TradingView

(Source: OANDA)