U.S. dollar extends decline as markets focus on tariff uncertainty
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The U.S. Dollar Index (DXY) remained under pressure early Monday, trading just below 104.00, following its largest weekly drop since November 2022. The greenback fell more than 3% last week, with losses accelerating due to weaker U.S. labor data and renewed recession fears, exacerbated by uncertainty surrounding President Donald Trump’s trade policies.
The latest Nonfarm Payrolls report showed job creation slowing to 151,000 in February, below the 160,000 expected, while the unemployment rate edged higher to 4.1%. Federal Reserve Chair Jerome Powell acknowledged rising policy uncertainty, signaling that the Fed could maintain higher-for-longer rates if inflation stalls, but also left open the possibility of easing policy should labor market conditions deteriorate.
Amid this backdrop, the EUR/USD pair surged more than 4% last week, consolidating around 1.0850 in early Monday trading. GBP/USD also gained over 2.5%, supported by broad-based USD weakness, hovering near 1.2920 ahead of the Bank of England’s (BoE) Quarterly Bulletin release.
Meanwhile, gold (XAU/USD) held steady around $2,910 after breaking above $2,900 last week, while USD/JPY slipped below 148.00, pressured by a stronger yen. In contrast, USD/CAD rebounded slightly above 1.4350, as markets await Wednesday’s Bank of Canada (BoC) policy decision, with additional volatility expected after Trump suggested potential tariff hikes on Canadian and Mexican imports set for April 2.
Looking ahead, investors remain focused on geopolitical developments and trade policy headlines, with risk sentiment likely to dictate FX market direction. The dollar’s next moves will be influenced by U.S. inflation data on Wednesday, which could shape expectations for Fed policy adjustments in the coming months.
The latest Nonfarm Payrolls report showed job creation slowing to 151,000 in February, below the 160,000 expected, while the unemployment rate edged higher to 4.1%. Federal Reserve Chair Jerome Powell acknowledged rising policy uncertainty, signaling that the Fed could maintain higher-for-longer rates if inflation stalls, but also left open the possibility of easing policy should labor market conditions deteriorate.
Amid this backdrop, the EUR/USD pair surged more than 4% last week, consolidating around 1.0850 in early Monday trading. GBP/USD also gained over 2.5%, supported by broad-based USD weakness, hovering near 1.2920 ahead of the Bank of England’s (BoE) Quarterly Bulletin release.
Meanwhile, gold (XAU/USD) held steady around $2,910 after breaking above $2,900 last week, while USD/JPY slipped below 148.00, pressured by a stronger yen. In contrast, USD/CAD rebounded slightly above 1.4350, as markets await Wednesday’s Bank of Canada (BoC) policy decision, with additional volatility expected after Trump suggested potential tariff hikes on Canadian and Mexican imports set for April 2.
Looking ahead, investors remain focused on geopolitical developments and trade policy headlines, with risk sentiment likely to dictate FX market direction. The dollar’s next moves will be influenced by U.S. inflation data on Wednesday, which could shape expectations for Fed policy adjustments in the coming months.