Just yesterday, Donald Trump unfurled a plan to double import tariffs on steel and aluminum. This easing has caused quite a reaction in the financial markets. This legislative decision seeks to shield domestic industries from predatory foreign interests. It governs the US’s trade relations and makes essential currency pairs like EUR/USD and GBP/USD fluctuate.
As FM touched off the European session on Monday, EUR/USD was soaring above 1.1370. Gold traders were quick to respond to the announced tariff hikes proposed by Trump. They were quick to highlight US fiscal policy that has quite literally undermined the dollar. The next major upside obstacle for the EUR/USD is seen at 1.1450, an area of interest for a number of speculators.
The British pound has held up surprisingly well against the dollar. The GBP/USD exchange rate was hovering closer to 1.3500, demonstrating overall signs of strength for the day. Now analysts are betting that the pair will be able to make the most of this momentum. Recent trends toward a weaker dollar have bolstered their confidence.
This shift in the currency landscape has been against the backdrop of growing optimism about the Fed’s monetary policy. Fresh bets on rate hikes have prompted a wave of USD selling, contributing to the current shifts in currency trading. Now investors are becoming spooked by US fiscal irresponsibility, adding to the dollar’s downward pressure compared to other currencies.
The $100 billion in proposed tariff increases by Trump so far is only one piece of a much broader strategy aimed at strengthening American manufacturing. The administration continues to argue that these actions will keep jobs here and stimulate economic growth. Critics warn that these tariffs would likely spark retaliatory measures from our trading partners and could quickly spiral into damaging trade wars.