US Dollar Strengthens Against Yen and Euro Amid Tariff Uncertainty

The White House’s tariff policy remains at the center of attention for investors and FX traders. After the US Supreme Court ruled on Friday that a significant portion of the import tariffs introduced by Donald Trump were unlawful — as he lacked the authority to invoke the International Emergency Economic Powers Act (IEEPA) without congressional approval — the US president announced a new adjustment, raising the rate from 10.0% to 15.0%, this time under the Trade Act of 1974. The new restrictions will apply for the next 150 days and cannot be extended without approval from Congress. Trump has already stated that he plans to further tighten trade conditions for certain countries in the coming months, raising concerns among nations that have already signed bilateral agreements with the United States. Analysts note that if pressure on key trading partners continues after the 150-day period expires, legal challenges are likely to follow. Recent comments from monetary authorities also drew attention. Federal Reserve Governor Christopher Waller said he would be willing to keep borrowing costs unchanged at the March meeting if February labor market data confirm stability. Meanwhile, Atlanta Fed President Raphael Bostic told Reuters that the US economy may be entering a period of structurally higher unemployment as companies adopt artificial intelligence tools and curb hiring — a trend the Fed may no longer be able to offset through rate cuts, making further continuation of a dovish cycle potentially inappropriate.

Eurozone

The euro is losing ground against the US dollar, strengthening versus the yen, and showing mixed dynamics against the pound.

Today, representatives of the European Commission stated that the introduction of 15.0% tariffs by the Republican administration in the White House violates an already agreed trade deal. As a result, the ratification process has been suspended until clarification is provided regarding the new restrictions. Bernd Lange, Chair of the European Parliament’s Committee on International Trade, noted that Washington has repeatedly violated negotiated agreements: last year, just weeks after a deal was concluded, the US raised tariffs to 50.0% on 400 products, and during the Greenland crisis adjusted rates for certain European countries. According to Lange, Brussels needs assurance that conditions will remain unchanged over the coming years. He emphasized that if trade tensions continue to escalate, the European Commission reserves the right to apply retaliatory measures against US businesses under the previously approved Anti-Coercion Instrument (ACI).

United Kingdom

The pound is gaining against the yen and the US dollar, while showing mixed performance against the euro.

February data on the retail sales balance index from the Confederation of British Industry (CBI) were released today and proved weak: the negative reading deepened from –17.0 to –43.0 points, far worse than analysts had expected (–27.0 points). Retailers attribute the deterioration to unusually prolonged rainy weather, which pushed consumers toward online shopping. Online sales growth was the fastest since April 2021, but this was not enough to lift the overall index. Businesses expect the decline to ease back to –17.0 points in March. Later today at 16:15 (GMT+2), markets will focus on a speech by Bank of England Governor Andrew Bailey before the Parliamentary Treasury Committee, where he may provide further insight into the authorities’ next steps on monetary policy.

Japan

The yen is weakening against its main peers — the pound, the euro, and the US dollar.

The currency came under pressure after reports that Prime Minister Sanae Takaichi expressed concerns about further interest rate hikes during a meeting with Bank of Japan Governor Kazuo Ueda. The Mainichi reported this today, citing its own sources. If confirmed, a lack of alignment between the executive branch and the central bank could complicate further increases in borrowing costs. Neither government officials nor the central bank have commented so far, adding to investor unease. It is worth recalling that economists surveyed by Reuters this month expected the policy rate to reach 1.00% by June, with some even pointing to possible changes in monetary conditions as early as April amid ongoing concerns about inflation and yen weakness.

Australia

The Australian dollar is losing ground against the pound, the euro, and the US dollar, while strengthening against the yen.

In the absence of major economic releases, currency movements are largely driven by external factors. Investors are preparing for the release of January inflation data on Wednesday at 02:30 (GMT+2), which are expected to confirm that inflation remains above the Reserve Bank of Australia’s 2.0–3.0% target. Year-on-year CPI is projected to rise from 3.6% to 3.8%, the trimmed mean is expected to ease from 3.4% to 3.3%, and the weighted median from 3.8% to 3.7%.

Oil

Oil prices are attempting to move higher today ahead of a new round of talks on the “nuclear deal” between representatives of the United States and Iran, scheduled to take place in Geneva on Thursday.

Investors and FX traders are also encouraged by reports from US officials suggesting that the White House is considering only a limited number of strikes on Iranian infrastructure to push Tehran toward a quicker resolution. These would target military and administrative facilities, but could provoke a significant response from Iran’s armed forces. Later today at 23:30 (GMT+2), the weekly oil inventory report from the American Petroleum Institute (API) will be released. Stockpiles are expected to rise by 1.85 million barrels, which could slow the upward momentum in energy prices.