The decline of the US dollar with the rise of the euro during today's trading

US Dollar Index (DXY)

The dollar fell on Thursday after its gains of the previous session, as investors reacted to President Trump's announcement of imposing 25% tariffs on car imports.

The tariff announcements have been surprisingly negative for the dollar recently, but the future direction of the currency will most likely depend on how countries respond to the US tariffs, since in the absence of any retaliation, the dollar may rebound thanks to the feeling of relief to contain the impact of tariffs on US exports and US economic growth.

As for any retaliatory response from America's largest trading partners, we believe that it will further damage the prospects for US growth and, consequently, the dollar will decline.

The dollar index DXY fell by 0.2%, after reaching a 3-week high on Wednesday.

On the other hand, Alberto Musalem, a member of the Federal Reserve, said on Wednesday that inflation is likely to be higher and growth is lower than expected, and that there is no urgent need for the Federal Reserve to cut interest rates, which could give this dollar a boost to climb back up again.

EURUSD

The euro rose from a 3-week low on Thursday after US President Trump imposed 25% tariffs on imported cars and light trucks starting next week, even as risk appetite waned due to the possibility of a full-scale trade war.

The euro rose 0.5% to USD 1.07885 after touching a 3-week low of USD 1.0733 in early trading.

GBPUSD

The British pound rose by 0.3% to 1.2928 US dollars, after falling yesterday after negative inflation data.

Data on Wednesday showed that the annual inflation rate in the UK slowed less than analysts expected, although analysts warned that energy prices and tax increases could push inflation rates back up to about 4% this year and thus the pound sterling held up again after an initial decline.