The US dollar rises as the market awaits Trump's announcement on tariffs.

The Foreign exchange contact dealerUS dollar reached a three-week high against the euro on Wednesday and also rose against the yen. Traders are focused on an upcoming news conference by President Trump concerning automobile tariffs. Trump is expected to announce tariffs on imported cars, a move that could spark broader trade tensions, impact US economic growth, and reignite inflation concerns.

On Monday, Trump stated that he might announce tariffs on imported cars and would also unveil a plan next week for reciprocal tariffs on major trade deficit countries. Additionally, Trump and his economic advisers have indicated that a series of new tax measures will be announced on April 2, which may include tariffs on more industries.

Prior to the tariff announcement, the euro weakened significantly, dropping to $1.075, the lowest since March 5. The euro ended down 0.32% against the dollar, at $1.0757, and is expected to fall for the sixth consecutive day. EU trade officials met with Trump's trade representatives on Tuesday in hopes of avoiding high US tariffs on EU goods, although the outcome is still unclear.

Meanwhile, concerns over the energy situation between Russia and Ukraine have intensified, with both sides accusing each other of violating the US-brokered energy truce. The EU stated it would not agree to Russia's Black Sea ceasefire conditions. Additionally, a surprising increase in US durable goods orders in February provided support for the dollar.

Federal Reserve officials are uncertain about the impact of tariffs on the economy. Some officials have noted that tariffs could drive up prices, providing a rationale for interest rate hikes, or they could dampen economic growth, necessitating lower borrowing costs. The yen fell 0.42% against the dollar, to 150.5 yen.

The governor of the Bank of Japan stated that if rising food costs trigger broad inflation, the central bank might raise interest rates, but cautioned that the core inflation rate remains below the annual target of 2%.

Moreover, the British pound and Australian dollar are also under pressure. The pound fell to a two-week low, affected by cooling inflation and a statement from the UK Chancellor of the Exchequer. The Australian dollar ended down 0.14% against the US dollar at $0.6292, impacted by slower consumer inflation in Australia in February.

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