Currency Outlook | April 2025

The below key drivers are likely to impact investor risk sentiment and FX markets in April.

• Broad and aggressive US trade tariffs are creating volatility and weighing on export-focused currencies and fuelling safe-haven demand.
• Concerns over a potential US recession, triggered by trade impacts, is shifting sentiment and adding pressure on the US dollar.
• Central bank responses are divided as mixed economic and inflation data across regions is causing contrasting currency performance.

→ EUR | Euro

The euro surged after Trump’s tariffs on EU goods, but gains eased as tensions rose. Markets now await EU retaliation and the ECB’s next move on interest rates.

The EURUSD saw some huge swings at the beginning of April as Donald Trump hit the eurozone with 20% charges on its exports to the US. The charge was broadly in line with what markets were expecting for the European bloc, however, the over-plan led to a massive US dollar sell off and a jump for the euro. In just 12 hours, from April 2 and April 3, the EURUSD spiked from US$1.08 to US$1.1150 – an extraordinary move in such a short space of time. The pair then retraced to finish the week around the US$1.10 handle, as some calm was restored to markets.

European Commission President, Ursula von der Leyen, has proposed a slew of reciprocal tariffs, due to be unveiled by the European Union later this month. The EUR’s movement against the USD will likely be dictated by how much each are willing to compromise.

April 17 sees the European Central Bank’s (ECB) latest interest rate decision, with markets expecting another 0.25% cut in borrowing costs to be unveiled by ECB Chief, Christine Lagarde. Commentary on what Trump’s aggressive tariff plan could mean for the bloc will be closely monitored.

Expected ranges:

• EURUSD 1.0785–1.1200
• EURGBP 0.8330–0.8550

↑ GBP | British pound sterling

The pound saw sharp moves as Trump announced global tariffs. The UK’s response will be critical, with negotiations likely shaping the currency’s direction in the near term.

In early April, GBPUSD saw some of the biggest swings since the pandemic, as Donald Trump finally unveiled his much-awaited plans for tariffs on imports from around the world. The UK was included in the group of countries hit with the baseline 10% charge, but there was some relief as the penalties were lower than those imposed on other regions.

After steadily rising from US$1.26 to US$1.29 over the course of March, April 2 saw the GBPUSD jump to US$1.32 in just 24 hours. The move was quickly unwound as the pair dropped back to US$1.29 on April 4 after US President Trump indicated that tariffs could be amended if affected countries give concessions to the US.

Looking ahead, tariffs will continue to dominate the news and UK Prime Minister, Keir Starmer’s response to them will be key. At present, the Prime Minister is looking to negotiate for lower or no tariffs, in a more non-confrontational manner. Should the UK government achieve a deal with the US then the pound could rally. However, should the US be unreceptive, the UK could respond with charges of their own. If this happens, we could see the pound fall back to the mid-1.25’s. All macro data will likely take a back seat for the time being.

Expected ranges:

• GBPUSD 1.2600–1.3200
• GBPEUR 1.1695–1.2000

↓ AUD | Australian dollar

The Australian dollar dropped amid rising trade tensions and US tariff announcements, with markets concerned about US growth. As long as trade risks remain high, recovery for the AUD may be unlikely.

The AUD tracked within a narrow range for much of March, bouncing between US$0.62 and US$0.64, as markets attempted to position themselves ahead of tariff and trade policy updates from the White House. 

Volatility surged on April 3 in the wake of President Trump announcing the results of the reciprocal tariff review. In summary, the US announced a blanket 10% tariff on more than two thirds of the countries around the world, with larger taxes to be applied to those countries the US deems to hold an unfair trade surplus. Large tariffs were levied on South East Asian countries, with China facing a 34% increase in tariffs, pushing the total tax applied on Chinese exports to well over 50%. Vietnam, Laos and Cambodia are facing a 46%, 48% and 50% tax, respectively. 

The initial market reaction showed investors were more concerned with the negative impact on US growth than the implications for global trade and inflation. 

The escalation in trade tensions and trade tensions sent the AUD below US$0.62 and toward fresh 5 year lows just above US$0.5950. Unfortunately, the AUD losses have not been contained to the USD and the currency continued to mark fresh lows against other key counterparts, crashing below 0.55 against the euro, 0.4650 against the pound and 87 against the yen. 

The question now is, where to from here? As long as trade tensions remain elevated and risk aversion is peaked, the AUD may struggle to mount any meaningful recovery.

Expected ranges:

• AUDUSD 0.60–0.640
• AUDGBP 0.4850–0.51
• AUDNZD 1.0950–1.1150
• AUDEUR 0.5800–0.61

↓ NZD | New Zealand dollar

The New Zealand dollar slipped as global trade tensions escalated. With limited progress on US-China negotiations, market uncertainty remains high—keeping the NZD on the back foot for now.

March saw the NZD trade within a narrow range, bouncing off lows below US$0.5650, and testing levels above US$0.5820. Once US President Trump announced his aggressive tariff program on April 2, volatility surged.

The US announced a blanket 10% tariff on more than two thirds of the world’s countries, with the larger taxes to be applied to those countries the US deems to hold an unfair trade surplus against the US. China was given a 34% increase in tariffs, taking the total tax applied on Chinese exports over 50%. Other South East Asia countries attracted high tariffs. Vietnam, Laos, and Cambodia were given a 46%, 48% and 49% tax, respectively.

US yields fell steeply, and the US dollar suffered heavy losses in the 24 hours following the President’s address. Chinese officials announced plans to combat US tariffs with a 34% tariff on US imports, effectively meaning the world’s two largest economies have shut each other out.

The escalation in trade tensions and all out trade war, sent the NZD spiralling through supports. Having crashed below US$0.56, the NZD plunged below US$0.5550, testing support at US$0.55. The NZD has continued to mark fresh lows against other key counterparts crashing below 0.51 against the euro, 0.4350 against the pound and looks set to slip below 80.00 against the yen. As long as tensions remain elevated and risk aversion peaked, the NZD may struggle to mount any meaningful recovery.

Expected ranges:

• NZDUSD 0.5350–0.5800
• NZDGBP 0.4200–0.4500
• NZDAUD 0.9000–0.9200
• NZDEUR 0.5150–0.5350

↓ USD | United States dollar

Trump’s new global tariffs triggered market volatility and raised concerns about US economic growth. The USD’s direction now depends on how trade partners respond in the coming weeks.

US President Trump upended global trade on April 2 when he unveiled a swathe of tiered import tariffs. 

The latest plan delivered tariffs at the more extreme end of market predictions. China was hit with an additional 34% on top of the 20% already being charged on exports to the US. Many other countries that manufacture goods for US companies such as Vietnam, India, Bangladesh and Taiwan, saw large additional levies applied. The impact of these tariffs has been massive losses on US stock markets for companies like Apple and Nike, who rely on the cheaper Asian labour costs to manufacture their goods, which are then imported to the US. Apple alone lost $250bn in value the day after President Trump’s plans were announced. The economic turmoil the tariffs could continue to cause has now pushed some banks to predict the US could fall into recession later this year. Markets are speculating the Federal Reserve may need to implement extra rate cuts to support the economy, despite the fears that prices may rise on many goods. Should Trump quickly achieve concessions from many countries, we could see the US dollar recover some of its losses, but if big trading partners like China, the EU, Canada and Mexico push back, then the chances of a US recession will rise, and the USD could fall further.

Expected range:

• DXY 101.267-103.387

↑ JPY | Japanese yen

The yen saw mixed moves in March, gaining slightly against the dollar but slipping elsewhere. With global trade tensions rising, it may benefit from risk aversion, though challenges remain.

The yen strengthened against the US dollar in March, closing at 149.96, up from 150.45 at the month’s start, marking a 0.44% gain. The Bank of Japan (BoJ) maintained its key policy rate at 0.50% during its March meeting, following a 25-bps increase in January—the first-rate hike since before the 2007 financial crisis. Additionally, the BoJ is reducing Japanese Government Bond (JGB) purchases, anticipating a 7-8% reduction in its balance sheet by early 2026.

Japan’s economy grew by 0.6% in Q4 2024, but it was still below the 0.7% forecast, and February’s core Consumer Price Index (CPI) increased by 3.0% year-over-year. Despite the initial strength of the yen based on inflation data, concerns about the BoJ’s cautious stance on rate hikes persisted.

From the end of March into the first week of April, following the announcement of US tariffs, the USD declined for three consecutive days, raising concerns about its growth potential and safe haven status. The USDJPY pair fell by more than 2.2% to 146.01, its largest drop since August 2024. Many analysts believe that the downtrend of the USDJPY pair will continue, indicating a potential flight to safety towards the Japanese yen. However, analysts from HSBC suggest that the yen may not fully function as a “safe haven” due to Japan’s near-term risks. Nevertheless, it could outperform other currencies that are more exposed to US tariff risks, such as most emerging market Asian currencies, the euro, and risk-sensitive currencies like the AUD and NZD.

Expected ranges:

• USDJPY 143.00–158.00
• EURJPY 155.00–167.00

↑ CAD | Canadian dollar

The Canadian dollar strengthened after Canada was excluded from broad new US tariffs. Its direction going forward will likely depend on upcoming trade developments and key US economic data.

Throughout March, the CAD traded in a narrow range, bouncing off lows below US$0.6880 and testing levels above US$0.70. Volatility then surged on April 2 when President Trump announced an extensive and aggressive tariff program.

With markets fearing Canada could be subject to an extension in tariffs above those already applied, the CAD surged when President Trump confirmed now new tariffs would be applied against USCMA compliant goods. While we expect industry specific tariffs, specifically on auto exports, will be applied, Canada’s exemption saw the CAD lurch upward.

Having slipped below US$0.6950 in the moments following the US tariff announcement, the CAD has since surged, jumping through US$0.71 to mark highs just north of US$0.7125. CAD settled nearer US$0.71 as investors showed greater concern for the negative impact on US growth than the implications for global trade and inflation. With the USD unable to buy support through the first 24 hours following its tariff announcement, it has since been awash with support. Sentiment shifted following China’s response, as an all-out trade war looms large. The CAD outperformed most of the growth and commodity-led currencies, holding above US0.70 and remains above its pre-liberation day level.

Looking ahead, CAD performance will hinge on which side of the fence the market leans. Tariff headlines will continue to dominate direction, while US macroeconomic data sets will prove key in fuelling US recession fears.

Expected ranges:

• CADUSD: 0.6800 – 0.7200
• CADGBP: 0.5300 – 0.5500
• CADEUR: 0.6300 – 0.6600

→ SGD | Singapore dollar

The Singapore dollar held steady in March, supported by global sentiment early on. Looking ahead, its direction will likely depend on central bank decisions and broader global trade developments.

In March, USDSGD traded mostly between SG$1.33 and SG$1.35, with the SGD showing resilience early in the month as improved global risk sentiment supported regional currencies. The pair touched a year-to-date low of SG$1.328 by mid-March. However, the SGD gave up some gains in late March as strong US data, renewed trade tensions, and a softer-than-expected Singapore inflation print raised speculation of further MAS policy easing, lifting USDSGD back toward the mid-1.34s.

Singapore’s economic data was mixed. February’s core inflation dropped sharply to 0.6%, the lowest in nearly four years, while headline inflation held steady at 0.9%. This reinforced market expectations that the Monetary Authority of Singapore (MAS) may maintain or further ease policy in its April review. GDP growth for 2025 is projected between 1–3%, down from 4.4% in 2024, reflecting a more moderate outlook amid global uncertainty.

Looking ahead, USDSGD is expected to remain broadly stable in the near-term. The US Federal Reserve is likely to keep rates on hold through Q2, and Singapore’s low inflation gives the MAS policy space to remain accommodative. However, external risks such as US trade tariffs and weaker global demand could cap SGD strength Barring major surprises, USDSGD is expected to remain relatively stable in the coming month, with price action driven by Fed policy expectations, MAS policy guidance, and broader changes in global risk sentiment.

Expected range:

• USDSGD 1.3250-1.3550

→ HKD | Hong Kong dollar

The Hong Kong dollar stayed stable with support from mainland inflows and steady growth. USDHKD is expected to remain within its usual range, though U.S. rate cuts and trade tensions may influence movements.

February was steady for USDHKD. The pair drifted higher later in the month as strong US data and high rates kept the USD firm. The HKD got a boost from mainland investor inflows after Lunar New Year, local factors like liquidity and China’s investor sentiment added some extra push and pull.

On the data front, Hong Kong’s retail sales rose 3.1% MoM in January after a sharp fall in December. Although still down, retail sales were 5.2% YoY, with Lunar New Year helping to boost spending on basics like food and clothing. 2024 Q4 GDP grew 2.4% YoY and 2.5% for 2024 overall, helped by better exports and a small uptick in consumer spending, despite household demand staying under pressure from weak wages.

The USDHKD is expected to stay stable in the coming months, sticking within its usual range of 7.75–7.85, thanks to the strong peg and Hong Kong Monetary Authority’s (HKMA) active management. The US dollar has been supported by high interest rates, but as the Federal Reserve (Fed) is expected to start cutting rates later this year, which could ease pressure on the HKD and help it strengthen slightly. Risks like US-China trade tensions and China’s shaky economy could add headwinds, but unless there’s a major shock, USDHKD should stay near current levels.

Expected range:

• USDHKD 7.76–7.80

📃 How markets react to new tariffs. Read the article.

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