As Donald Trump prepares to announce new tariffs, a maneuver that will likely command national headlines and incite major economic controversy, that revelation will likely pale in comparison. That announcement comes during a week already brimming with important economic data, most notably the widely-followed Nonfarm Payrolls (NFP) data for March. There may be no greater fear than that of the imposition of Trump’s tariffs lighting the inflation match and thus killing economic growth in the U.S. This development has been a negative influence on the US Dollar, thus acting as a tailwind for the EUR/USD currency pair.
In fact, the recently enacted tariff changes raised the trade-weighted average tariff rate by over 60 percent. Now, all US imports are subject to an increase of about 5.5 to 6.0 percentage points. This latest increase has raised tariffs to levels not seen since their post–World War II peak. This boom is understandably raising alarm over the threat of a global tariff war. As market analysts are quick to caution, these tariffs are intended as protective domestic industry measures. The re-routing of trade may eventually undermine their effectiveness.
Gold prices stay on track to retake records in European trading on Monday, approaching $3,150. Similarly, gold is widely considered a safe-haven asset. It demonstrates resilience in the face of economic turmoil, and it draws investors seeking shelter from choppy markets. The intensifying fears of a global tariff war have only added to this upward momentum in gold prices.
EUR/USD pair looks to recoup some of the recent loss as US Dollar weakens. In fact, worries over the inflationary effects of Trump’s tariffs are one of the factors behind this drop. Analysts warn that this currency dynamic may be here to stay as prevailing inflationary pressures keep putting downward stress on the dollar.
Looking forward, all eyes will be on Germany’s preliminary CPI print and Trump’s first reciprocal tariff announcement. Both events are poised to have a profound impact on what direction the markets will take and how investors will feel.