The Euro and British Pound strengthened as the U.S. dollar continued to lose value in the foreign exchange market. On Tuesday, the U.S. dollar fell against major global currencies, except for a slight gain against the Japanese Yen.
Why is the Dollar Losing Value?
The decline of the dollar is largely linked to economic concerns surrounding the U.S. President Donald Trump’s trade policies. His administration’s aggressive approach, including imposing tariffs on key trading partners such as Canada, Mexico, China, and the European Union, has sparked fears of an economic slowdown. These trade restrictions have disrupted markets and raised concerns about a possible recession in the U.S.
Market analysts believe that the dollar is currently burdened with a lot of negative sentiment. ING analyst Francesco Pesole commented, “Our view is that the dollar is absorbing quite a lot of negative factors at the moment, and the risks in the coming weeks have shifted towards an upside. However, given the current market uncertainty, we are not ready to assume the dollar has hit rock bottom until key economic data is released.”
Currency Movements
- Euro (EUR/USD): The Euro rose from 1.0832 to 1.0887, benefiting from major spending announcements in Europe related to defense and infrastructure.
- British Pound (GBP/USD): The Pound climbed from 1.2877 to 1.2924, ahead of the upcoming Bank of England meeting on March 20.
- Japanese Yen (USD/JPY): The dollar slightly strengthened against the Yen, rising to 147.58 from 147.28. This followed reports of Japan’s GDP growth in the fourth quarter.
- Canadian Dollar (USD/CAD): The U.S. dollar weakened against the Canadian dollar, falling to 1.4411 from 1.4442. Investors are awaiting the Bank of Canada’s meeting, where a 25-basis-point rate cut is expected.
The next key central bank meetings include the European Central Bank (April 16-17), the Bank of England (March 20), and the Bank of Japan (March 18-19), all of which could further influence currency movements.
