The US Dollar is holding steady in a sideways trading pattern this week. Investors are awaiting further news on tariff implementation, particularly regarding reciprocal tariffs and potential caps. Recent data indicates a mixed economic picture, with contracting factory activity offset by a gradually cooling but still resilient labor market. Market participants are closely watching upcoming employment reports for clues regarding future Federal Reserve policy.
- The dollar index is trading sideways this week.
- Investors are awaiting President Trump’s tariff announcement.
- Reciprocal tariffs on nations imposing duties on US goods will take effect immediately.
- Tariffs would act as a “cap,” allowing countries to take steps to reduce them.
- US factory activity contracted in March for the first time this year.
- Prices rose for a second consecutive month, reflecting the impact of tariffs.
- Job openings declined in February, but layoffs remained low.
- Investors are focused on the ADP employment report and nonfarm payrolls.
The dollar’s near-term direction appears contingent on external trade developments and their impact on domestic economic activity. A contraction in manufacturing, coupled with rising prices, suggests that existing tariffs may be weighing on economic growth. However, a relatively stable labor market could provide some support. The market is likely to interpret upcoming employment data as a gauge of the overall health of the economy and, consequently, the likely path of monetary policy, which could lead to dollar appreciation or depreciation.