Notably dominating the currency market at the beginning of the week for the opening of trading in March was the Euro with a strong surge against other major currencies including the US dollar.
The Euro reached a 3-month high against the US dollar following reports that the German Conservatives and Social Democrats announced a proposal to provide a fund of 500 billion euros ($529 billion) for infrastructure and overhauling borrowing rules aimed at increasing defense spending.
The strengthening of the Euro also had a positive impact on regional currencies such as the Pound which also recorded an increase to a 3-month high against the US dollar.
Meanwhile, the US dollar continued to trade weak for the second day in a row despite concerns about the implementation of tariffs that engulfed the market earlier this week.
The tariffs on Mexico and Canada, including China, which were previously postponed for a month, were resumed starting Tuesday.
In addition, the situation is heating up even more when China is reported to have launched a 15% tariff response on American goods starting March 10.
While the US dollar often gains in risky market conditions as a safe-haven currency, analysts also see the risk of a slowdown in the US economy with expectations that countries that have been hit with tariffs will continue to retaliate.
Canada said retaliatory tariffs on the US would start on Tuesday and Mexico is expected to follow suit.
Prime Minister Justin Trudeau said the import tariffs imposed on Canada were a “stupid move” by President Trump.
With concerns about the risk of a slowdown in US economic growth, investors will focus on the jobs report due to be published at the end of the week.
