Investors are increasingly concerned about the U.S. economy’s ability to sustain growth, citing that higher tariffs could heighten inflation risks.

Additionally, analysts predict that the latest tariff hike could lead to a U.S. economic recession, which would likely prompt the Federal Reserve to cut interest rates further in an effort to stimulate a recovery. Such rate cuts would, in turn, put direct pressure on the U.S. dollar.

Meanwhile, the Bank of Japan is expected to maintain its tightening monetary policy amid stable inflation levels, narrowing the interest rate differential between Japan and the United States.

Source: Fxstreet