Investors are preparing for Trump's reciprocal tariffs

The US dollar is fluctuating on Tuesday as investors prepare for reciprocal tariffs due to be announced by US President Donald Trump on Wednesday.

Also today, the markets are waiting for the survey of vacancies and labor turnover in the United States (JOLTS) and the ISM Industrial Index, both of which may provide more information on how uncertainty in US trade policy affects the economy.

Trump announced in a speech two days ago that almost all countries will face new tariffs this week, although he did not provide specific details, which left the currency markets in a state of caution and calm.

The president of the European Commission, Ursula von der Leyen, stated that the EU is open to negotiations with the United States on trade, but we will respond aggressively if necessary.

EURUSD

The euro fell today near the levels of 1.0800 USD, after achieving a rise of 4.5% in the first quarter of the year, mainly due to Germany's commitment to sharply increase fiscal spending.

Investors have also recently stepped up their bets on future interest rate cuts by the European Central Bank due to tariff concerns and weak economic data, which led to lower bond yields and the single currency.

Markets are pricing in an almost 70% probability of an easing move by the ECB this month despite cautious statements from policymakers.

USDJPY

The Japanese yen also rose today to reach approximately 149.60 against the US dollar, and the yen had risen by about 5% against the dollar during the first quarter, supported by growing expectations that the Bank of Japan will raise interest rates again.

Data on Tuesday showed a deterioration in the sentiment of major Japanese manufacturers during the three months ending in March, indicating that the escalation of trade tensions has already had a negative impact on the export-dependent economy, which could complicate the Bank of Japan's next move.

AUDUSD

The Australian dollar rose slightly on Tuesday to 0.6255 after the central bank kept interest rates unchanged today at 4.10% as expected.

The Reserve Bank of Australia (RBA) made its first interest rate cut in more than four years in February, but has since adopted a cautious tone on further easing.

Matt Simpson, senior market analyst at City Index stated: said that the RBA statement indicates that it is slowly moving towards the next cut, but it is in no hurry to announce this before the elections or quarterly inflation figures, it is worth noting that there are general elections to be held in Australia next May 3.