President Trump is reportedly planning a two-step approach to tariffs, aiming to protect U.S. trade interests and generate quick revenue. The plan involves two key actions: first, using emergency powers to immediately impose tariffs on certain goods, potentially raising funds to support domestic tax cuts; second, investigating countries that might be engaging in unfair trade practices, particularly those with high trade barriers or reliance on imports like Venezuelan oil. While some countries may be exempt, this move signals a more aggressive stance on trade, which could have a wide-reaching impact on global markets.
Here’s how I see it. If this news gains traction, it’s likely to make the U.S. dollar stronger, particularly during today’s U.S. session. Why? Tariff announcements typically signal tighter trade policies, which can support the dollar as global investors see it as a safe-haven currency in uncertain times. This means pairs like EUR/USD and GBP/USD could trend lower, with the dollar gaining strength against the euro and pound.
On the flip side, the news might weigh on riskier currencies like the Australian dollar or emerging market currencies, as tariffs could slow global trade. If the markets perceive this as a step toward trade wars, safe-haven currencies like the Japanese yen might strengthen, but the dollar could still dominate overall.
For today’s session, keep an eye on key economic events and any updates to this tariff story. A rally in the DXY could push it toward recent resistance levels. In pairs like USD/JPY, a stronger dollar might mean testing higher levels, while a sharp drop in risk sentiment could push risk-sensitive currencies like AUD/USD lower.
If you’re trading intraday, watch for volatility during the overlap between the London and U.S. sessions, as this is when liquidity peaks and news-driven moves can accelerate. The dollar could see a sharp reaction if there’s more clarity or additional details about exemptions or targeted industries.
Overall, this is one of those moments where being prepared and reacting to the news flow in real-time could pay off. If the tariff plan gains momentum, the dollar’s strength might dominate the markets, but stay cautious as any opposing headlines could reverse moves quickly.