The U.S. dollar was poised to end the week on a stable note but was on track to experience a quarterly loss, as fears about tariffs undermining U.S. economic growth weighed on the currency. This shift in sentiment has contributed to declines in U.S. bond yields and stock prices.
Meanwhile, the euro was headed for its biggest quarterly gain in over a year, trading just below $1.08. The euro’s rally of more than 4% since the beginning of 2025 is attributed to a combination of optimistic peace prospects in Ukraine, dollar weakness, and a significant rise in benchmark German bond yields.
The Japanese yen showed slight strengthening, edging closer to a quarterly gain of nearly 4%, holding steady at 151.19 per dollar despite a persistent rise in Tokyo’s consumer price index.
Among the top-performing currencies in the G10 group were the Scandinavian crowns. The Swedish krona and Norwegian krone recorded impressive year-to-date gains of nearly 11% and 9%, respectively, as central banks in the region have not been quick to lower interest rates further.
On Friday, attention turned to economic data, with France and Spain set to release preliminary inflation figures, and the U.S. due to report its February core PCE inflation data, a key gauge for the Federal Reserve. If the monthly increase falls short of the expected 0.3%, it could add to downward pressure on the dollar and U.S. interest rates.
Despite these economic indicators, market focus was on President Donald Trump’s impending announcement of new tariffs next week, which has fueled uncertainty. Trump had already confirmed that a 25% tariff on imported cars will take effect on April 3. The recent decline of the dollar has caught many traders by surprise, especially considering prior expectations for a stronger dollar as a result of Trump’s tariff policies.
The Canadian dollar, which has gained about 0.5% this year, was an exception to the broader trend. Despite Canada facing numerous rounds of heavy U.S. tariffs, the loonie has remained resilient at C$1.4306 per U.S. dollar. Meanwhile, the euro could face volatility if Europe becomes the target of Trump’s next wave of tariffs.
Peter Dragicevich, an Asia-Pacific currency strategist at payments platform Corpay, noted that if broad-based punitive tariffs were imposed on the European Union, the EU would likely retaliate with countermeasures. Such actions could lead to the euro losing some of its recent gains.
The Australian dollar, trading at $0.6291, was headed for a 2% quarterly rise. It has remained within a stable trading range since December. The Reserve Bank of Australia’s monetary policy board, now with two new members, will meet next week, though no changes to interest rates are anticipated.
The New Zealand dollar was also stable at $0.5728 and looked set for a 2.5% quarterly gain.
Sterling, trading at $1.2943, held steady during the Asian session, reflecting a 3.5% gain for the year to date.
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