CANBERA (dpa-AFX) - The U.S. dollar weakened against other major currencies in the European session on Monday, as U.S. President Donald Trump's decision to double tariffs on steel and aluminum imports along with rising Sino-U.S. tensions threatened to rekindle global trade tensions.
U.S. President Donald Trump has announced that import tariffs on steel and aluminum will double to 50 percent starting June 4, in what he called a move to protect domestic industry.
China has accused the U.S. of violating their recent trade deal and vowed to take measures to defend its interests, dimming the prospect of an immediate leadership call that Trump wants to have to further bilateral talks.
In another development, U.S. Commerce Secretary Howard Lutnick indicated that tariffs are here to stay despite an ongoing legal battel.
In an interview with Fox News Sunday, he said that Trump 'has so many other authorities that even in the weird and unusual circumstance where this was taken away, we just bring on another or another or another.'
Trump weighed in hours later on his Truth Social platform: 'If the Courts somehow rule against us on Tariffs, which is not expected, that will allow other Countries to hold our Nation hostage with their anti-American Tariffs that they would use against us. This would mean the Economic ruination of the United States of America!'
Investors may also monitor the latest developments with U.S. federal tax-and-spending legislation that threatens to burgeon U.S. deficit.
The economic impact of Trump's tax package is seen as a short-term stimulus at the potential cost of long-term drag.
In the European trading now, the U.S. dollar fell to nearly a 1-1/2-month low of 1.1437 against the euro and nearly a 1-month low of 0.8159 against the Swiss franc, from early highs of 1.1353 and 0.8231, respectively. If the greenback extends its downtrend, it is likely to find support around 1.16 against the euro and 0.80 against the franc.
Against the pound and the yen, the greenback dropped to 6-day lows of 1.3558 and 142.79 from early highs of 1.3468 and 143.80, respectively. On the downside, 1.38 against the pound and 140.00 against the yen are seen as the next support levels for the greenback.
Against Australia, the New Zealand and the Canadian dollars, the greenback dropped to a 6-day low of 0.6490, a 1-week low of 0.6028 and nearly an 8-month low of 1.3674 from early highs of 0.6443, 0.5974 and 1.3729, respectively. The next possible downside target for the greenback is seen as the support levels for the greenback.
Looking ahead, Canada and U.S. manufacturing PMI for May and U.S. construction spending for April are slated for release in the New York session.
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