Market News

By Kevin Buckland

Summary

• Trump's trade war making markets nervous
• New round of reciprocal levies due April 2
• Investors weighing risks of U.S. downturn

TOKYO, March 24 (Reuters) - The dollar drifted just below a three-week high versus major peers on Monday as traders cautiously awaited clarity on U.S. President Donald Trump's next round of tariffs.
The euro rose slightly following three straight sessions of declines, while the yen edged lower against the greenback, pressured by a rise in U.S. Treasury yields.

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The U.S. dollar index , which measures the currency against a basket of six counterparts, was flat at 104.15 as of 0525 GMT, after touching 104.22 on Friday for the first time since March 7. Last week, the index rose 0.4%, its first week of gains this month.

The dollar has been under pressure for most of this year as the market's assumptions that Trump would quickly usher in pro-growth policies transformed into worries that the president's aggressive and erratic trade policies could trigger a recession.
The next round of tariffs is due on April 2, when the White House will announce reciprocal levies on many countries.
"We downgraded our dollar forecasts last week but still expect some dollar strength from current levels," Goldman Sachs analysts wrote in a research note.

"The market has rapidly repriced the shift in the growth outlook, and ran ahead of the forecast changes our teams have made for 2025," they said.
Additionally, "our economists downgraded U.S. growth because we now expect tariffs to rise more substantially, which we think should still be positive for the dollar."
The dollar gained 0.35% to 149.83 yen . The currency pair tends to track changes in bond yields, and 10-year Treasury yields added as much as 2.5 basis points to 4.2790% on Monday.
The euro advanced 0.1% to $1.0819, climbing off Friday's nearly three-week trough of $1.0795.
The shared currency had been buoyed to the highest since early October at $1.0955 last week on optimism over Germany's move to loosen fiscal constraints in order to boost military and infrastructure spending.

00:28S&P 500, Nasdaq gain to snap four-week losing decline

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However, the currency slipped back in recent days in the lead up to the actual ratification of the change, with Germany's upper house of parliament passing the bill on the so-called debt brake on Friday. "With the passage of the bill complete, we expect euro to give back more of its recent gains as it becomes apparent it will take a long time to increase spending significantly," Commonwealth Bank of Australia analysts wrote in a client note. "But the elephant in the room is next week's announcement by President Trump of a new tariff regime." Sterling was flat at $1.2914, as was the Australian dollar at $0.6277. Cryptocurrency bitcoin ticked up about 2% to $87,006. The Turkish lira was steady around 38.0050 per dollar , even as a Turkish court on Sunday jailed Istanbul Mayor Ekrem Imamoglu, President Tayyip Erdogan's main political rival, pending graft charges, which Imamoglu denies.

The incarceration comes after the main opposition party, European leaders and hundreds of thousands of protesters criticised the actions against him as politicised and undemocratic.
The lira briefly lurched to a record low of 42 per dollar last week, when Turkey's central bank said it had suspended one-week repo auctions and hiked its overnight lending rate to 46%, a move that economists say amounts to a tighter policy stance.

Reporting by Kevin Buckland; Editing by Stephen Coates and Edwina Gibbs