Forex Today: US Dollar under pressure as tariff headlines dominate markets

Here is what you need to know on Monday, April 7:

After staging a rebound to end the previous week, the US Dollar (USD) stays under pressure on Monday as investors scrutinize the latest developments surrounding US tariffs. Eurostat will publish Retail Sales data for February and the US economic calendar will not feature any high-impact data releases in the second half of the day on Monday.

The upbeat March employment data from the US and Federal Reserve (Fed) Chairman Jerome Powell's relatively hawkish comments helped the USD stay resilient against its rivals heading into the weekend. Nevertheless, the USD Index lost more than 1% for the week still.

The US Bureau of Labor Statistics reported on Friday that Nonfarm Payrolls rose by 228,000 in March, beating the market expectation of 135,000 by a wide margin. Later in the day, Fed Chairman Jerome Powell said US President Donald Trump's tariffs are bigger than expected, and they risk higher inflation and slower growth. "The Fed's obligation is to make certain that a one-time increase in price levels doesn't become an ongoing inflation problem," he added.

Trump said over the weekend that unless they solve the trade deficit with China, he will not be making a deal. In the meantime, US Commerce Secretary Howard Lutnick confirmed on Sunday that the tariffs would not be postponed and the policy will remain in place for days and weeks.

EUR/USD fell nearly 0.8% on Friday but gained about 1.2% for the week. Early Monday, the pair stays in positive territory at around 1.1000. European Central Bank (ECB) policymaker Yannis Stournaras warned on Monday that Trump tariffs risk a large euro-area demand shock, per the Financial Times. Earlier in the day, the data from Germany showed that Industrial Production contracted by 1.3% on a monthly basis in February, following the 2% expansion reported in January.

AUD/USD declined sharply on Friday and lost about 4% for the week. The pair extended its slide during the Asian trading hours and touched its weakest level in five years below 0.5950 before recovering to the 0.6000 area. Australian Treasurer Jim Chalmers said that the fall in the Australian Dollar (AUD) was largely a result of concerns about the Chinese economy, and added that it also reflected the fact that markets are now expecting around four interest rate cuts in Australia this calendar year.

USD/JPY closed in positive territory on Friday but lost nearly 2% for the week. The pair stays under bearish pressure at the beginning of the week and trades slightly below 145.50, where it's losing more than 1% on the day. Japanese Chief Cabinet Secretary Yohsimasa Hayashi said on Monday that they are closely watching market moves with a sense of urgency. Meanwhile, Japanese Prime Minister Shigeru Ishiba said late Sunday that Japan would continue pressing the US to lower tariffs on Japanese goods, but acknowledged that progress was unlikely to come overnight.

GBP/USD lost over 1.5% on Friday and erased all of its weekly gains. Following a bearish opening to the week, the pair recovers slightly and trades little changed on the day at around 1.2900 in the European morning.

After setting a new record high midweek, Gold staged a deep correction and lost nearly 2.5% on Friday. XAU/USD declined sharply in the early Asian session on Monday and touched its weakest level since mid-March at $2,970 before rebounding above $3,000 by the European morning.