U.S. Dollar Rallies Amid Tariff Discussions

By Karen Brettell
NEW YORK (Reuters) – The U.S. dollar rallied on Thursday as its recent weakness appeared to be exhausted. The euro weakened slightly after the European Central Bank (ECB) cut rates for the seventh time this year.

The greenback stabilized this week, holding a tight range against the euro following significant drops last week due to concerns over tariffs and investment shifts abroad.

Eric Theoret, an FX strategist at Scotiabank, noted, “We’ve had a pretty impressive run of strength for most of the G10 currencies, so we’re just in a bit of a pause phase right now.” He indicated a bearish medium-term view for the U.S. dollar, describing the current movement as consolidation.

Traders are attentive to U.S. tariff discussions, particularly with Japan and the European Union. Recently, Trump mentioned “big progress” in tariff talks with Japan and indicated that world nations, including China, are eager to engage in discussions.

Italian Prime Minister Giorgia Meloni planned a meeting with Trump regarding EU tariffs, while U.S. Treasury Secretary Scott Bessent has invited South Korea’s finance minister for discussions next week.

The ECB’s interest rate cut aims to support a euro zone economy facing challenges from U.S. tariffs. FX analyst Kirstine Kundby-Nielsen commented on the ECB’s dovish tone and focus on downside risks to growth.

Federal Reserve Chair Jerome Powell stated that the Fed would await additional economic data before making rate changes, highlighting concerns that Trump’s tariff measures could disrupt inflation and employment goals.

In response, Trump criticized Powell, suggesting that his removal was overdue, and called for the Fed to lower interest rates.

Data revealed a decrease in new unemployment benefit applications last week, indicating stable labor market conditions in April.

As of the latest checks, the euro was down 0.35% at $1.1358, below last week’s three-year high. The dollar also strengthened against the Japanese yen and Swiss franc, with the yen at 142.24.

Upcoming trading volumes are likely to diminish due to Good Friday market closures, although foreign exchange will remain active.

Other currencies showed mixed results: the kiwi rose 0.51% following stronger-than-expected inflation data, the Aussie increased 0.22% due to rebounding employment, and sterling was up 0.07% at $1.3249.

In the cryptocurrency market, bitcoin saw a minor increase of 0.29% to $84,540.