The DXY Index consolidated in a narrow 104.02-104.37 range overnight, ahead of US President Donald Trump’s scheduled tariff announcement at 4 pm in the Rose Garden today – near the close of the US trading session. Markets are poised for volatility before and after the announcement, given the prevailing climate of economic uncertainty. Equity bulls and USD bears will hope for a relief rally if the announced tariffs are lighter than feared. Much will hinge on Trump’s tone – whether he signals openness to negotiations or doubles down on more confrontation. Conversely, risk aversion will take hold if the US tariffs are broad and aggressive, with a second wave of volatility expected should China and the EU respond swiftly with retaliatory measures.
EUR/USD has been languishing in a 1.0750-1.0850 range after retreating from its March 18th high of 1.0955. The evolving US-EU trade dynamics resemble a high-stakes poker game. Washington and Brussels are engaged in calculated actions and countermoves, each aiming at gaining leverage to protect national interests without folding too early or crashing the table. European Commission President Ursula von der Leyen has articulated a “strong plan” to retaliate, if necessary, while emphasizing the preference for negotiated solutions. However, this path is fraught, given the Trump administration’s hawkish trade posture and the end of the US peace dividend in Europe. Misreading each other’s resolve risks a miscalculation that could inflict economic pain on both sides before any resolution is found.
Fingers crossed.
Quote of the Day
“ Vertigo is the conflict between the fear of falling and the desire to fall.”
Salman Rushdie
April 2 in history
The first full-time movie theatre in the US, opened in Los Angeles, California, in 1902
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