Tariff Uncertainty Weighs on Dollar as Global FX Reacts | 23rd February, 2026

Tariffs Pressure Dollar

Currency markets are reacting to renewed trade tensions as tariff uncertainty pressures the US Dollar and lifts major counterparts. Reports that the EU may freeze approval of a US trade deal, alongside China’s call for Washington to remove unilateral tariffs, have reignited concerns over global trade stability. The shifting tone has supported risk-sensitive currencies, with the Australian Dollar and Canadian Dollar advancing, while the Pound Sterling strengthens above 1.3500 amid broad-based USD softness. Markets are recalibrating expectations as geopolitical trade risks re-enter the spotlight.

EUR/USD Forecast

Current Price and Context

EUR/USD finds support as reports suggest the EU may freeze approval of a US trade deal amid renewed tariff threats. Trade uncertainty is weighing on the US Dollar, providing the Euro with a modest tailwind.

Key Drivers

Geopolitical Risks: Rising trade tensions between the US and EU boost demand for non-USD currencies.

US Economic Data: Softening USD sentiment offsets recent macro resilience.

EU Trade Policy: Potential freeze of trade deal approval signals diplomatic strain.

China-US Relations: Beijing’s call to lift unilateral tariffs adds to global uncertainty.

Monetary Policy: ECB-Fed divergence remains secondary to trade-driven flows.

Technical Outlook

Trend: Mild bullish recovery.

Resistance: 1.1880

Support: 1.1780

Forecast: Upside bias persists while tariff uncertainty pressures the Dollar.

Sentiment and Catalysts

Market Sentiment: Constructive on EUR.

Catalysts: Trade headlines, US macro data, yield spreads.

AUD/USD Forecast

Current Price and Context

AUD/USD extends gains as tariff uncertainty weighs on the US Dollar, supporting risk-sensitive currencies.

Key Drivers

Geopolitical Risks: Trade tensions weaken USD sentiment.

US Economic Data: Dollar softness offsets domestic AUD headwinds.

China Relations: Trade developments remain crucial for the Aussie.

Commodity Prices: Stable resource demand underpins sentiment.

Monetary Policy: RBA-Fed expectations remain in the background.

Technical Outlook

Trend: Bullish correction.

Resistance: 0.7180

Support: 0.7080

Forecast: Further upside possible if trade tensions continue to pressure the USD.

Sentiment and Catalysts

Market Sentiment: Risk-on, USD-negative.

Catalysts: Trade negotiations, US data releases, China headlines.

GBP/USD Forecast

Current Price and Context

GBP/USD trades above 1.3500 as Sterling gathers strength amid tariff confusion and broad US Dollar weakness.

Key Drivers

Geopolitical Risks: Trade-related uncertainty dampens USD demand.

UK Economic Data: Domestic outlook remains stable but secondary.

US Economic Data: Dollar weakness supports the pair.

Trade Policy: EU-US tensions contribute to broader USD softness.

Monetary Policy: BoE-Fed divergence remains a structural theme.

Technical Outlook

Trend: Short-term bullish recovery.

Resistance: 1.3580

Support: 1.3450

Forecast: Gains may extend if tariff rhetoric escalates further.

Sentiment and Catalysts

Market Sentiment: Constructive Sterling bias.

Catalysts: Trade developments, US macro data, UK releases.

USD/CAD Forecast

Current Price and Context

USD/CAD drifts lower below 1.3650 as tariff uncertainty pressures the US Dollar and higher crude oil prices support the Canadian Dollar.

Key Drivers

Geopolitical Risks: Trade tensions weigh on USD sentiment.

Oil Prices: Firmer crude underpins CAD strength.

US Economic Data: Mixed signals limit USD recovery attempts.

Trade Policy: North American trade stability contrasts with broader US tensions.

Monetary Policy: Fed-BoC expectations influence medium-term direction.

Technical Outlook

Trend: Bearish bias.

Resistance: 1.3720

Support: 1.3580

Forecast: Downside risks remain while oil stays firm and USD sentiment weakens.

Sentiment and Catalysts

Market Sentiment: CAD-positive tone.

Catalysts: Oil prices, trade headlines, US macro releases.

USD/CNH Forecast

Current Price and Context

USD/CNH faces mild pressure as China’s Commerce Ministry urges the US to lift unilateral tariffs, adding to trade-driven Dollar softness.

Key Drivers

Geopolitical Risks: Escalating tariff rhetoric increases FX volatility.

China Policy Signals: Official stance supports Yuan stability.

US Economic Data: Dollar softness dominates near-term flows.

Trade Policy: Central theme driving currency adjustments.

Monetary Policy: PBoC stance remains supportive of controlled currency moves.

Technical Outlook

Trend: Slight bearish bias for USD.

Resistance: 7.2400

Support: 7.1800

Forecast: Further downside possible if trade tensions intensify and USD remains under pressure.

Sentiment and Catalysts

Market Sentiment: Cautiously USD-negative.

Catalysts: US-China trade headlines, policy statements, broader risk sentiment.

Wrap-Up

With tariff rhetoric resurfacing, FX markets are likely to remain sensitive to further trade-related headlines. Any escalation could deepen Dollar weakness and fuel gains in major and commodity-linked currencies, while signs of de-escalation may restore USD stability. As geopolitical uncertainty blends with macro positioning, volatility across currency markets may persist in the near term.

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