U.S. Dollar Drops Amid Fed Rate Cut Bets

(RTTNews) - The U.S. dollar weakened against other major currencies in the European session on Thursday, as traders increase their bets that the Fed will lower rates in June, as Trump imposes fresh tariffs, traders increase their wagers that the Fed will lower rates in June.

U.S. President Donald Trump announced steeper-than-expected reciprocal tariffs on U.S. trade partners, heightening concerns over a global trade war that could destabilize major economies. White House press secretary Karoline Leavitt indicated the new levies will be "effective immediately."

Trump imposed an additional 34 percent tariff on Chinese imports, raising total levies in China to 54 percent. Australia was hit with a 10 percent tariff, Japan was struck with a 24 percent tariff, alongside the 25 percent levies on auto and auto parts imports, dealing a heavy blow to Japan's auto industry. U.S. Treasury Secretary Scott Bessent has warned trading partners that any retaliation to the barrage of new tariffs from the White House would only result in further escalation.

U.S. recession fears stoked safe-haven demand for bonds, gold and the yen, while crude prices were down more than 2 percent in Asian trade.

In the European trading today, the U.S. dollar fell to nearly a 5-month low of 0.8682 against the Swiss franc, more than a 3-week low of 146.81 against the yen and more than a 1-1/2-month low of 1.4160 against the Canadian dollar, from early highs of 0.8791, 148.34 and 1.4259, respectively. If the greenback extends its downtrend, it is likely to find support around 0.85 against the franc, 145.00 against the yen and 1.40 against the loonie.

Against the euro and the pound, the greenback slid to near 6-month lows of 1.0990 and 1.3140 from early highs of 1.0880 and 1.3026, respectively. The greenback is likely to find support near 1.10 against the euro and 1.32 against the pound.

Looking ahead, Eurostat is set to release euro area producer prices for February at 5:00 am ET in the European session. Prices are forecast to grow 0.3 percent on month, following a 0.8 percent rise in January.

At 7:30 am ET, the European Central Bank publishes the account of the governing council meeting held on March 5 and 6.

In the New York session, Canada and U.S. trade data for February, U.S. weekly jobless claims data, U.S. and Canada S&P Global PMI data for March, are slated for release.