Haven currencies strengthened Tuesday as investors turned cautious ahead of President Trump's anticipated announcement of global reciprocal tariffs scheduled for Wednesday at 4 p.m. EDT. A reported 20% tariff plan targeting broad imports heightened fears of trade disruptions, weighing heavily on sentiment.

U.S. Data Weakens, Treasury Yields Decline

U.S. Treasury yields fell for the third day after the March ISM manufacturing PMI slipped into contraction territory at 49.0, while the JOLTS report signaled slowing job openings. Markets now await Wednesday’s ADP employment figures and Friday’s payrolls for clarity on Fed policy direction.

Euro Dips on Soft Inflation, ECB Outlook

EUR/USD edged lower after euro zone inflation cooled to 2.2%, fueling expectations of imminent ECB rate cuts. Downside was tempered by a 1.7% rally in Germany’s DAX. EUR/USD remains above critical support at 1.0729, with options markets signaling heightened volatility risks.

Sterling Rangebound Amid Indecision

GBP/USD traded narrowly between 1.2880–1.2940, forming a daily doji pattern reflecting indecision ahead of UK PMI data. BoE policymaker Greene cautioned about inflation expectations but assured policy stability. Key support is at the 100-day moving average at 1.2806.

Yen Gains as Yields Slide Further

USD/JPY declined alongside falling U.S. yields and weakening growth prospects. A break below 148.18 (March 20 low) could accelerate bearish momentum, while resistance remains at 151.30. One-week implied volatility rose to 11.6%, highlighting heightened uncertainty.

Commodity Currencies Supported by Positioning

Commodity-linked currencies gained modestly, benefiting from short-covering despite mixed commodity prices. AUD/USD rose 0.29%, and CAD strengthened despite weak Canadian PMI data.

Stocks, Oil Retreat Amid Trade Worries

The S&P 500 fell 0.37%, dragged by industrials and financials, while oil prices declined 0.32% amid supply and tariff uncertainties. FX markets remained cautious heading into critical data releases and tariff developments.