As we close out another eventful week, the U.S. dollar is trading with an offered tone, while major currencies continue to gain ground. Key highlights include:

Market Overview

• EUR/USD: Up 0.37%, maintaining upward momentum.
• GBP/USD: Sterling is up 0.41%, printing a new year-to-date high.
• USD/CAD: The Canadian dollar is up 0.24%, also hitting a fresh year-to-date high.
• USD/JPY: The yen is down 0.3%, reflecting mixed sentiment.

U.S. Dollar Weakness & Tariff Developments

• DXY Hits a Two-Month Low: The U.S. dollar index (DXY) has drifted down as reciprocal tariffs won’t come into effect until April 1st.
• Year-to-Date Highs for Majors: Sterling, the Australian dollar, and the Canadian dollar have all printed new highs against the U.S. dollar this morning.

Market Reacting Less to Tariffs

• Markets are becoming less sensitive to tariff headlines, seeing them more as a negotiation tool rather than an imminent policy shift.
  • Tariff discussions have kept currencies in a tight range, but as long-dollar positions unwind, the dollar has continued to move lower.

Volatility & Market Positioning

Pre-Holiday Trading Dynamics

• With a long weekend in both Canada and the U.S., the market is selling volatility, leading to moves lower in EUR, JPY, and GBP.
• Awaiting Fed Commentary
  • Markets are looking for any signals from Fed Speaker Logan this afternoon to provide guidance on future rate policy.

Broader Macro Themes

• U.S. wanting to cut Iranian oil exports
• Tariffs and rising oil prices
• Firm U.S. interest rates despite Trump’s calls for lower rates
• CPI data pushing rate cut expectations further out

Looking Ahead

With a long weekend ahead, markets will look for fresh economic data and policy guidance next week. While Trump continues to push for lower interest rates, inflationary pressures and geopolitical factors—including tariffs and oil prices—are keeping rates firm.

Conclusion

This week has been dominated by tariff discussions, softening dollar momentum, and firming macroeconomic conditions. With the U.S. dollar losing ground against most major currencies, next week’s developments will be key in determining whether this trend continues.

Enjoy the long weekend, and we’ll be back with more insights next week!