Dollar Slips as Tariff Fears Weigh, Euro and Scandinavian Currencies Shine

The U.S. dollar is poised to end the week steady but faces a quarterly loss, pressured by concerns that looming tariffs could stall economic growth. Market fears over U.S. President Donald Trump’s pledge to introduce sweeping new tariffs, including a 25% levy on imported cars from April 3, have dragged down U.S. yields, stocks, and the greenback.

Meanwhile, the euro is on track for its strongest quarterly gain in over a year, rising more than 4% to just under $1.08. Contributing factors include optimism over peace in Ukraine, a weaker dollar, and surging German bond yields. The Japanese yen has also edged higher, sitting at 151.19 per dollar, with a near 4% quarterly gain despite a persistent Tokyo inflation print.

Scandinavian currencies lead G10 performance, with the Swedish krona and Norwegian krone up nearly 11% and 9%, respectively, thanks to central banks showing restraint in easing policy. The Canadian dollar has managed a modest 0.5% gain year-to-date to C$1.4306, despite being hit by U.S. tariffs.

Eyes are now on upcoming inflation data from France, Spain, and the U.S. core PCE index. Any reading below the expected 0.3% monthly rise could add pressure on the dollar and further soften interest rate expectations.

Elsewhere, the Australian dollar is up around 2% to $0.6291 ahead of next week’s RBA meeting, while the New Zealand dollar has gained 2.5% this quarter to $0.5728. Sterling remains steady at $1.2943, marking a 3.5% rise in 2025 so far.

Currency strategists warn that if the EU becomes Trump’s next tariff target, the euro could face a reversal as Europe prepares to retaliate.