EUROPEAN FX UPDATE: Dollar in the doldrums as "sell America" trade seemingly back on the table

USD: DXY -0.5%; 98.81

• Hefty losses for the dollar so far as the "sell America" trade resumes following the punchy rhetoric seen between the US and China since Friday, alongside Trump upping the blanket steel and aluminium tariffs to 50% from 25%.


• To recap, the US President on Friday took aim at China in which he noted how they are violating their agreement with the US after Trump dialled back the tariffs on Chinese goods.


• China's MOFCOM stated that if the US insists on going its own way and continues to undermine China's interests, China will continue to resolutely take forceful measures to safeguard its legitimate rights and interests.


• Traders look ahead to the US ISM Manufacturing data at 15:00 BST followed by a speech by Fed Chair Powell at 18:00 BST, whilst risk events towards the end of the week include the US NFP.


• DXY has ventured as low as 98.675 today from a 99.358 high, briefly dipping under last week's low of 98.69, with the next level to the downside the 22nd April low at 98.01.

EUR: EUR/USD +0.6%; 1.1419

• Benefitting from the slide in the Dollar and with strength also emanating from the EUR's stable status in a "sell America" environment.


• Aside from that, newsflow for the bloc has been light with no reaction seen to mixed Final Manufacturing PMI data from countries in the region.


• EUR/USD topped 1.1400 at the time of writing and resides in a 1.1340-1.1436 range at the time of writing.

JPY: USD/JPY -0.8%; 142.82

• JPY is firmer amid the softer US dollar coupled with risk aversion amid Trump upping steel and aluminium tariffs, coupled with the punchy rhetoric between the US and China.


• Japan's tariff negotiator Akazawa plans to visit the US for tariff talks for four days from Thursday, according to Jiji News.


• USD/JPY resides towards the bottom of a 142.77-144.09 range.

GBP: GBP/USD +0.6% 1.3539

• Another beneficiary of the softer Dollar whilst UK specifics remain light.


• BoE's hawk Mann is due for a text release at 10:30 BST; Mann last spoke on 14th May whereby she noted the UK labour market has been more resilient than expected. Worried that household inflation expectations have increased.


• GBP/USD resides towards the upper end of a 1.3455-1.3557 range at the time of writing.

Antipodeans: AUD/USD +0.7; 0.6479. NZD/USD +1.0%; 0.6016

• Biggest gainers on the dollar weakness and upside in base metals on the back of Trump upping steel and aluminium tariffs to 50% from 25%, with the high-beta pairs unfazed by the downbeat risk tone and New Zealand holiday closure.


• AUD/USD trades in a 0.6433-0.6489 range while NZD/USD 0.5960-0.6027.

02 Jun 2025 - 10:15- ForexEU Research- Source: Newsquawk