The euro remained largely stable on Wednesday, while the dollar saw a modest rebound from recent losses as traders assessed Europe’s reaction to fresh U.S. tariffs and positioned for key inflation data.

By 06:37 ET (10:37 GMT), the euro edged down 0.1% against the dollar to $1.0911, while the U.S. dollar index—tracking the greenback against a basket of major currencies—rose 0.2% to 103.54.

Trump’s Tariffs Escalate Trade Tensions

New U.S. tariffs on steel and aluminum took effect on Wednesday, marking another step in President Donald Trump’s push to reshape America’s trade relationships.

In response, the European Commission expressed regret over the move, calling it “disruptive to transatlantic trade” and warning that it would hurt both businesses and consumers by driving up prices.

Brussels announced a two-step countermeasure:

• First, the EU will allow the suspension of previous retaliatory tariffs to lapse on April 1, impacting 8 billion euros worth of European steel and aluminum exports.
• Second, the EU will impose fresh tariffs on over 18 billion euros worth of U.S. exports starting next month.

“The European Union must act to protect consumers and businesses. The countermeasures we take today are strong but proportionate,” said European Commission President Ursula von der Leyen.

Markets Watch U.S.-Ukraine Talks and Inflation Data

Traders are also closely monitoring the U.S. decision to resume intelligence sharing and military aid to Ukraine, following Kyiv’s support for a Trump administration proposal for a 30-day ceasefire with Russia. While the Kremlin has yet to officially respond, Russian Foreign Minister Sergei Lavrov signaled reluctance to accept any compromises that could endanger Russian interests.

Dollar Recovers Slightly, CPI Data in Focus

The dollar has been under pressure in recent weeks due to mounting fears of a U.S. recession, fueled by weak consumer sentiment and labor market data. Trump recently declined to rule out the possibility of an economic downturn.

All eyes are now on the U.S. Consumer Price Index (CPI) report, set for release later on Wednesday. The data is expected to show that inflation remained sticky in February, offering further insight into the Federal Reserve’s next policy steps..