From Morningstar: 2025-04-03 12:45:00

European stock and bond markets are reeling from President Trump’s unexpected tariffs on dozens of countries. The US dollar weakened, and safe-haven currencies like the yen and franc gained. The euro hit a six-month high at $1.1145. Analysts foresee US recession and inflation due to tariffs.

US dollar’s decline against the euro was attributed to fears of a US recession and inflation. If impacted countries retaliate, the dollar could face more pressure. Market reactions suggest tariffs could harm the US economy. Morningstar economist called tariffs a “self-inflicted economic catastrophe” for the US.

The EU prepares potential support measures in response to US tariffs. European stock markets may benefit from repositioning by global investors. Germany’s willingness to expand fiscal policies could further boost the euro against the dollar in the short term.

Uneven tariffs could alter currency market dynamics. Countries facing tariffs above 10% may see currency impacts. Capital flows may reverse as countries repatriate assets, weakening the US dollar and US financial assets. Tariffs may lead to changes in global financial system dynamics and currency values.



Read more at Morningstar: Dollar Slides Against the Euro on Trade Tariffs Fallout