The U.S. dollar strengthened above an 11-week low on Thursday as market uncertainty grew following President Donald Trump's vague tariff threats on Europe and delays to levies on Canadian and Mexican goods.
The euro steadied at $1.0479 after dropping from a one-month high of $1.0529, with investors watching Germany’s coalition government talks and Trump’s proposed 25% “reciprocal” tariff on European cars and goods.
Trump also hinted that 25% tariffs on Mexican and Canadian imports might take effect on April 2 instead of March 4. However, a White House official clarified that existing levies remain “as of now” while Trump reviews border security measures and efforts to curb opioid smuggling.
The Canadian dollar hovered near a two-week low, while the Mexican peso traded at 20.408 per dollar. Meanwhile, the dollar index edged up 0.10% to 106.56, moving away from its two-month low of 106.12 hit earlier in the week.
Despite Trump’s mixed messages, markets remained cautious. "Traders are waiting for a real catalyst, and Trump’s rhetoric wasn’t one," said Matt Simpson, a senior market analyst at City Index.
Concerns over slowing U.S. economic growth and inflation have weakened the dollar nearly 4% from its January peak. Recent economic data, including weak business activity and a decline in consumer confidence, have fueled expectations of at least two Federal Reserve rate cuts in 2025, though no immediate changes are expected.
Elsewhere, the yen held at 149.17 per dollar, benefiting from falling U.S. Treasury yields and speculation of Bank of Japan rate hikes. Sterling traded at $1.2667 after reaching a two-month high of $1.2717. The Australian and New Zealand dollars remained near recent lows, with the Aussie at $0.6303 and the Kiwi at $0.5696.


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