The greenback has largely stabilized this week and held within a tight range against the single currency, following large drops last week that were prompted by concerns over the economic impact of tariffs and investors shifting investments overseas.
“We’ve had a pretty impressive run of strength for most of the G10 currencies and so I think we’re just in a bit of a pause phase right now,” said Eric Theoret, FX strategist at Scotiabank. “Our medium-term views still bearish for the U.S. dollar, so we’re just seeing this as a bit of a consolidation.”
Traders are closely watching discussions between the United States and trading partners for signs of a deal that may offer some clarity on the objectives of the Trump administration.
Trump touted “big progress” in tariff talks with Japan on Wednesday and also posted on social media on Thursday that “Every Nation, including China, wants to meet!”
Italian Prime Minister Giorgia Meloni heads to the White House on Thursday to discuss tariffs imposed on the European Union with Trump, while U.S. Treasury Secretary Scott Bessent has invited South Korea’s finance minister to Washington for talks next week. The ECB cut interest rates to their lowest level since late 2022, looking to prop up an already struggling euro zone economy that will take a large hit from U.S. tariffs. “It has a dovish tone. Focus has shifted to looking at the downside risk to the growth outlook, rather than upside risk to inflation,” said Kirstine Kundby-Nielsen, FX analyst at Danske Bank.
U.S. Federal Reserve Chair Jerome Powell said on Wednesday the Fed would wait for more data on the economy’s direction before changing interest rates, but cautioned that Trump’s tariff policies risked pushing inflation and employment further from the central bank’s goals.
Trump responded on Thursday that Powell’s termination “cannot come fast enough”, while calling for the U.S. central bank to cut interest rates.
Data on Thursday showed that the number of Americans filing new applications for unemployment benefits fell last week, suggesting labor market conditions remained stable in April.
The euro was last down 0.35% on the day at $1.1358 and is holding below a three-year high of $1.1473 reached on Friday. Against the Japanese yen, the dollar strengthened 0.3% to 142.24. It earlier reached 141.60, the lowest since September 18.
Trading volumes are expected to decline ahead of Good Friday, when most U.S. markets will close though foreign exchange will remain open.
Against the Swiss franc, the dollar strengthened 0.55% to 0.817.
Meanwhile the kiwi gained 0.51% to $0.5964 following data showing that New Zealand consumer prices rose faster than expected in the first quarter.
The Aussie strengthened 0.22% to $0.6383. Data showed Australian employment rebounded in March.
Sterling was last up 0.07% at $1.3249.
In cryptocurrencies, bitcoin increased 0.29% to $84,540.
