Forex Today: US Dollar under heavy pressure as trade war deepens

Here is what you need to know on Thursday, April 3:

The US Dollar (USD) suffers heavy losses against its major rivals on Thursday as markets assess how US President Donald Trump's tariffs could impact the economic activity. The European Central Bank (ECB) will publish Monetary Policy Meeting Accounts and the US economic calendar will feature weekly Initial Jobless Claims and March ISM Services PMI data later in the day.

The Trump administration announced on "Liberation Day" that they will impose a 10% baseline tariff, effective April 5, on all imports to the US. United Kingdom, Australia and Saudi Arabia will be among the countries that will only face this base rate. Canada and Mexico will be exempt from this 10% increase. Officials will also impose higher reciprocal tariffs, which will go into effect on April 9, on about 60 countries they describe as "worst offenders." The European Union, China and Japan will face 20%, 54% and 24% tariffs, respectively, under this new regime. Additionally, Trump confirmed that they will impose 25% tariffs on all foreign-made automobiles.

Following the tariff announcements, the USD Index fell 0.5% on Wednesday and extended its slide during the Asian trading hours on Thursday. At the time of press, the USD Index was down more than 1% on the day near 102.50.

European Commission President Ursula von der Leyen responded to US President Donald Trump's reciprocal tariffs early Thursday, calling them a major blow to the world economy. "We are preparing a further package of measures to protect our interests," she added. EUR/USD gathers bullish momentum and trades at its highest level since early October above 1.0960 in the European session.

GBP/USD rallies higher and trades at its strongest level in six months above 1.3100.

USD/CAD loses more than 0.5% on the day and trades below 1.4200, while USD/MXN falls about 0.7% on the day. Canadian Prime Minister Mark Carney said late Wednesday that the country will fight Trump's tariffs with countermeasures

After posting small losses on Wednesday, USD/JPY declines sharply and trades near 147.00, losing nearly 1.5% on a daily basis.

Gold touched a new record-high above $3,160 in the Asian session but lost its traction. At the time of press, XAU/USD was trading marginally lower on the day at $3,125.

Earlier in the day, the data from China showed that the Caixin Services PMI improved to 51.9 in March from 51.4 in February. China's Commerce Ministry reiterated on Thursday that it firmly opposes US tariffs and will "resolutely take countermeasures to safeguard its rights and interests." AUD/USD struggles to benefit from the broad-based selling pressure surrounding the USD and trades marginally higher on the day at around 0.6300.