It was a very ugly day for the US Dollar yesterday as the aggressive bets on rate cuts for the Fed following the tariffs announcement pushed the greenback to the lowest level in 6 months.

It’s a different story today with the dollar erasing most of the losses against the major currencies with GBPUSD in the chart below now almost below the pre-tariffs announcement level.

This is has been especially evident in the AUDUSD and NZDUSD pairs with AUDUSD on track for the worst day YTD. Perhaps, traders minds cooled a bit and realised that it’s going to be bad for everyone and not just the US. It’s hard to find conviction in FX in this period given the lack of strong divergence in policies and the uncertainty around tariffs.

That’s also why trading different markets gives a trader higher chances of finding better and more straightforward trades like for example crude oil where everything was stacked in favour of lower prices.

The focus is now on the US NFP and especially on Fed Chair Powell. Again, it’s hard to get strong conviction on the most likely reaction to both the events but more bad news could now see the greenback having the upper hand.

This article was written by Giuseppe Dellamotta at www.forexlive.com.