EUROPEAN FX UPDATE: USD steady as markets brace for "Liberation Day"

USD: DXY U/C 104.16

• DXY is flat vs. peers as markets brace for US President Trump's "Liberation Day" announcement at 21:00BST/16:00EDT. Ahead of which, CNBC reported that Trump is looking at three main options, 1) blanket 20% tariffs, 2) a tiered system of three different rates and 3) country-by-country rates; an official noted that blanket 20% tariffs was the least likely option. Thereafter, a WSJ article noted that the USTR was preparing a new tariff option for Trump of "an across-the-board tariff on a subset of nations that likely would not be as high as the 20% universal tariff option". Ahead of the announcement, US Commerce Secretary Lutnick could provide some insight on the matter during an interview on Bloomberg TV @ 13:30BST. In terms of the market reaction, ING writes that it will "depend on the size of tariffs, geographical/sectorial distribution, and openness to negotiation". Elsewhere, today's docket includes the ADP employment report ahead of NFP on Friday and factory orders. DXY is currently tucked within yesterday's 104.01-36 range. If the USD rises on the announcement, the 200DMA kicks in @ 104.89. To the downside, the WTD low sits @ 103.75.

EUR: EUR/USD U/C; 1.0800

• EUR is flat vs. the USD and holding around the 1.08 mark as the Bloc braces for the fallout of the US "Liberation Day". As it stands, the EU retaliated to the Trump administration's steel and aluminium levies with countermeasures on up to EUR 26bln worth of US goods. Furthermore, on today's announcement, EC President von der Leyen has stated that the EU has the power to push back against US tariffs with all instruments on the table for countermeasures. However, her preference would be to negotiate. Today's EZ docket is light in terms of data but heavy on speakers with the slate including ECB's Lagarde, Schnabel, Lane, Holzmann and Escriva. However, events in Washington will likely dominate price action for EUR/USD; currently contained within yesterday's 1.0778-1.0830 range.


• EUR/USD opex: 1.0700 (1.4bln), 1.0750 (644mln), 1.0770-80 (490mln), 1.0785 (278mln), 1.0790-1.0800 (5bln), 1.0825 (418mln), 1.0850 (903mln), 1.0885-95 (1bln), 1.0900-10 (677mln), 1.0920-25 (1.5bln).

JPY: USD/JPY -0.1%; 149.53

• JPY is a touch firmer vs. the USD after USD/JPY topped out at the 150 mark. Fresh newsflow out of Japan has been on the light side as markets await details of the Trump tariff regime later today. As it stands, the Japanese government has been pushing to receive an exemption from the auto tariffs which are set to be implemented on April 3rd. This, allied with a draconian tariff scheme on broader US imports could deal a severe body blow to the Japanese economy. PM Ishiba has already touted the possibility of funding support to cash-strapped firms in an attempt to protect the economy from the higher tariffs, according to Reuters. USD/JPY remains caged within yesterday's 148.97-150.14 bounds.

GBP: GBP/USD U/C; 1.2918

• GBP steady vs. the USD and EUR with incremental macro drivers for the UK on the light side. Of course, the main focus for today's session will be the severity of the Trump administration's tariff plans. In the event that levies are not universal, the UK will likely be subject to less draconian measures than the EU with UK PM Starmer noting yesterday that discussions on an economic deal with the US are "well advanced". As such, EUR/GBP could be a key cross to watch in the wake of the announcement. Cable is currently holding above the 1.29 mark and is tucked within yesterday's 1.2878-1.2940 range.

Antipodeans: AUD/USD +0.4%; 0.6302. NZD/USD +0.6%; 0.5734

• Antipodeans have extended on yesterday's upward momentum that was facilitated as risk sentiment improved stateside and with Australian building approvals data showing a narrower-than-feared contraction. That being said, it is worth noting that the Trump tariff announcement carries a lot of risk for AUD and NZD given that China (both nations' largest trading partner) is very much in the crosshairs of the US administration. AUD/USD has moved back above its 50DMA @ 0.6295 and made its way back onto a 0.63 handle. The next upside target comes via the 28th March high @ 0.6311. NZD/USD has also extended above its 50DMA @ 0.5702 with the next potential resistance point coming via the 28th March high @ 0.5741.

02 Apr 2025 - 10:00- ForexEU Research- Source: Newsquawk