Forex Today: US Dollar retreats as markets assess tariff headlines, await mid-tier data releases
Here is what you need to know on Thursday, March 27:
The US Dollar (USD) struggles to preserve its strength early Thursday as market participants assess the latest developments surrounding the US trade policy. In the second half of the day, the US Bureau of Economic Analysis will announce its final revision to fourth-quarter Gross Domestic Product data. The economic calendar will also feature weekly Initial Jobless Claims and February Pending Home Sales data from the US.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.45% | -0.01% | 0.71% | -0.57% | -0.64% | -0.20% | 0.10% | |
| EUR | -0.45% | -0.57% | -0.24% | -0.98% | -1.10% | -0.61% | -0.31% | |
| GBP | 0.00% | 0.57% | 0.72% | -1.04% | -0.57% | -0.04% | 0.15% | |
| JPY | -0.71% | 0.24% | -0.72% | -1.26% | -1.35% | -0.88% | -0.61% | |
| CAD | 0.57% | 0.98% | 1.04% | 1.26% | -0.01% | 0.37% | 0.67% | |
| AUD | 0.64% | 1.10% | 0.57% | 1.35% | 0.00% | 0.51% | 0.81% | |
| NZD | 0.20% | 0.61% | 0.04% | 0.88% | -0.37% | -0.51% | 0.37% | |
| CHF | -0.10% | 0.31% | -0.15% | 0.61% | -0.67% | -0.81% | -0.37% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
US President Donald Trump announced on Wednesday that they are planning to impose a 25% tariff on all car imports to the US. Trump said that auto tariffs will be permanent and go into effect on April 2. Later in the day, Reuters reported that the Trump administration could allow up to a one-month reprieve for auto part imports. In a social media post early Wednesday, Trump said that they will impose large scale tariffs, "far larger than currently planned," on Canada and the European Union if they do economic harm to the US.
After reaching its highest level in two weeks near 104.70, the USD Index retreats on Thursday and fluctuates below 104.50. Meanwhile, US stock index futures trade mixed after Wall Street's main indexes closed in negative territory on Wednesday.
USD/JPY registered gains on Wednesday and erased Tuesday's losses. The pair holds steady at around 150.50 in the European morning on Thursday. Japan Chief Cabinet Secretary Yoshimasa Hayashi said on Thursday that they have once again, asked the US to exempt Japan from auto tariffs.
EUR/USD dropped to its lowest level in two weeks near 1.0730 in the Asian session on Thursday but managed to stage a rebound. The pair was last seen trading marginally higher on the day at around 1.0770. Later in the day, several European Central Bank (ECB) policymakers, including President Christine Lagarde, will be delivering speeches.
Pressured by soft inflation data and Spring Budget announcement, GBP/USD lost nearly 0.5% on Wednesday. The pair holds its ground early Thursday and trades above 1.2900.
Gold failed to make a decisive move in either direction and closed the day virtually unchanged on Wednesday. XAU/USD edges higher in the European morning and trades above $3,030.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.