US dollar gains as tariff uncertainty remains in focus

The US dollar on Wednesday strengthened against the Euro and Yen as traders mulled whether tariffs planned by the US President Donald Trump to be announced next week will be less onerous than feared.

The British pound, meanwhile, fell to a two-week low on cooler inflation after British Finance Minister Rachel Reeves delivered her latest fiscal statement.

The US currency has reportedly alternated between bouts of optimism and fear over whether levies placed on trading partners will be more or less flexible, with traders concerned tariffs will dent growth and potentially reignite inflation.

Steve Englander, head of global G10 FX Research and North America macro strategy at Standard Chartered Bank's New York Branch, said everybody is trying to figure out what is going to be done on tariffs.

“They want to avoid market pressure before there's an announcement. But I think there's also some risk that, when push comes to shove, the announced tariffs will be more hawkish than the market's pricing,”; he said.

Trump had on Monday, said automobile tariffs were coming soon even as he indicated that not all of his threatened levies would be imposed on April 2 and some countries may get breaks.

The greenback also got a modest bid on Wednesday after durable goods orders unexpectedly rose in February.

The euro has failed to get a boost from tariff optimism this week and is on pace for its sixth consecutive day of declines against the U.S. currency.

It reached $1.0766 on Wednesday, the lowest since March 6.

The European Union's trade commissioner, Maros Sefcovic met with Trump's top trade officials on Tuesday to try to avoid steep US tariffs on EU goods next week, but results of the talks were unclear.

​
Bank of America reported that its proprietary flow data showed an acceleration of selling from the official sector, which includes sovereign wealth funds and central banks of euros against the dollar beginning last week.