FX.co ★ Dollar Tumbles 2%, Worst Single-Day Drop in Over 2 Years

The US dollar index experienced a significant decline of approximately 2% on Thursday, dropping to 101.8. This marks the index's sharpest single-day decrease in over two years and its lowest point in six months. This reaction from the market was in response to President Trump's recent announcement regarding tariffs. On Wednesday, Trump introduced a 10% baseline tariff on all imports, which is scheduled to take effect on April 5. Additionally, certain countries will face even higher tariffs: 54% for China, 20% for the European Union, and 46% for Vietnam. Both China and the EU have already vowed to retaliate, leading to heightened concerns about a potential recession in the US and increasing inflationary pressures. Consequently, traders have adjusted their expectations, now anticipating three to four quarter-point rate cuts by the Federal Reserve this year—up from three anticipated cuts as of Wednesday—with the first reduction expected in June. On a related note, the Challenger report indicated that US companies undertook significant job cuts in March, the most since 2020, largely attributed to layoffs in the DOGE sector. The upcoming jobs report, set to be released tomorrow, will offer additional insights into the labor market's current state.