Forex Today: US Dollar struggles to extend rebound after tariff pause, eyes on CPI

Here is what you need to know on Thursday, April 10:

Following another volatile day on Wednesday, markets remain cautious on Thursday and the US Dollar (USD) struggles to hold its ground. The US economic calendar will feature Consumer Price Index (CPI) figures for March, alongside the weekly Initial Jobless Claims data. Several Federal Reserve (Fed) policymakers will also be delivering speeches in the American session.

Wall Street's main indexes opened in negative territory on Wednesday after China responded to US tariffs by imposing additional 84% tariffs on US imports from April 10, up from the 34% previously announced. Later in the day, US President Donald Trump announced that he authorized a 90-day pause on reciprocal and 10% tariffs effective immediately but lifted the tariff rate on Chinese imports to 125%. Following this development, major equity indexes in the US shot higher. The Nasdaq Composite gained 12%, the S&P 500 and the Down Jones Industrial Average rose 9.5% and 7.9% on the day, respectively. The USD Index also regained its traction and ended the day marginally higher.

Reports of China preparing a trade war arsenal to take aim at US companies caused safe-haven flows to return to markets. Additionally, the Chinese Commerce Ministry and Foreign Ministry published a joint statement, saying that they will take further measures to oppose the US bullying. Early Thursday, US stock index futures trade in negative territory and the USD Index loses 0.4% on the day at around 102.50. In the US, the annual inflation, as measured by the change in the CPI, is forecast to soften to 2.6% from 2.8% in February.

In the early Asian session, the data from China showed that the CPI declined by 0.4% on a monthly basis in March. After gaining more than 3% on Wednesday, AUD/USD seems to have entered a consolidation phase above 0.6100 in the European session.

The European Commission said early Thursday that they will consult with members states and industries, and take the necessary time to assess the latest developments regarding Trump tariffs before deciding on the next step. EUR/USD gathers bullish momentum on Thursday and gains more than 0.5% above 1.1000.

GBP/USD closed in positive territory for the second consecutive day on Wednesday. The pair extends its upside in the European session and trades above 1.2850.

After rising 1% on Wednesday, USD/JPY reverses its direction and trades at around 146.50 on Thursday, losing about 0.9% on a daily basis.

Gold rose more than 3% on Wednesday and erased a large portion of the previous week's losses. XAU/USD preserves its bullish momentum and rises about 1% on the day near $3,110.