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Forex – Dollar Still on the Back Foot on U.S. Tariff Announcement

© Reuters.  Dollar remains under pressure despite Powell remarks© Reuters. Dollar remains under pressure despite Powell remarks

Investing.com – The U.S. dollar remained lower against other major currencies on Friday, as worries over a potential global trade war following news of fresh U.S. tariffs continued to weigh on sentiment.

U.S. President Donald Trump announced plans on Thursday to impose tariffs of 25% on imported steel and 10% on aluminum, in a move to “protect U.S. industry”.

The news sparked concerns over potential trade wars, which drastically dampened risk sentiment.

The announcement overshadowed positive remarks by Fed Chair Powell, who told the Senate Banking Committee on Thursday that there was no evidence the U.S. economy is overheating.

Two days earlier, the Fed president had reiterated that the U.S. central bank would likely move forward with gradual increases in interest rates.

Separately, New York Federal Reserve President William Dudley said on Thursday that four interest-rate hikes this year would constitute a “gradual” tightening.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.09% at 90.15 by 05:15 a.m. ET (09:15 GMT), off Thursday’s six-week peak of 90.89.

The euro was moderately higher, with EUR/USD up 0.11% at 1.2277, while GBP/USD held steady at 1.3762.

Earlier Friday, data showed that activity in the UK construction sector rose last month but still remained subdued.

In the euro zone, a report showed that German retail sales fell 0.7% in January, confounding expectations for an increase of 0.9%.

Elsewhere, the yen and the Swiss franc remained stronger, with USD/JPY down 0.50% at 105.69 and with USD/CHF sliding 0.44% to trade at 0.9378.

The Australian dollar was lower, with AUD/USD easing 0.08% to 0.7749, while NZD/USD held steady at 0.7247.

Meanwhile, USD/CAD rose 0.20% to trade at 1.2862.

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