March 26 (Reuters) - The dollar index rose on Wednesday due to worries about a possible announcement from the Trump administration regarding auto tariffs, which undermined investor confidence. EUR/USD reached a session low after Maroš Šefčovič, the European Union's chief trade negotiator, indicated that President Donald Trump might impose tariffs of approximately 20% on the bloc next week. U.S. President Donald Trump is readying an announcement on auto levies as soon as Wednesday, Bloomberg News reported, citing people familiar with the matter. Treasury yields firmed marginally after a jump in durable goods orders in February and comments by Fed officials. Minneapolis Federal Reserve Bank President Neel Kashkari and and St. Louis Fed President Alberto Musalem maintained the U.S. central bank's steady-rate rhetoric. The non-partisan Congressional Budget Office forecast that the U.S. government will probably risk defaulting on some of its $36.6 trillion in debt as soon as August - or possibly even by late May - unless Congress acts to raise the nation's debt ceiling, .
EUR/USD slid below a flag base at the March 6 low of 1.0766 following the tariff warning by EU's Šefčovič.
A rising 21-day moving average at 1.0761 offers support ahead of its 1.0727 200-day moving average, though the pair may be hemmed in by large 1.0750-1.0800 option strikes expiring on Thursday and Friday. European Central Bank governing council member Fabio Panetta said in a letter to the Financial Times that the bank must be pragmatic and data-driven in setting its interest rates. GBP/USD remained under pressure following a report indicating that U.K. CPI slowed more than anticipated in February. A much-anticipated budget update from Finance Minister Rachel Reeves revealed lower-than-expected UK borrowing requirements for the 2025/26 financial year. Cable's 21-day moving average at 1.2873 offered support for the New York session.
EUR/GBP hovered above its 100-day moving average of 0.8330 after the Reeves update though EUR1.7b of 0.8465 expiries on Thursday will likely cap gains.
USD/JPY trimmed gains after nearing a session high of 150.75 as declining U.S. stock prices boosted the yen's haven appeal. USD/JPY continues be in a bull trend from the March 11 low though upward momentum is slowing after it failed to make a new daily high above 151. The March high of 151.30 is nearby resistance above 151, while bulls would likely be neutralized on a drop below Tuesday's low of 149.55 and the 9-day exponential moving average at 149.60.
Increasing prices of oil and metals bolstered commodity currencies against their G10 counterparts. USD/CNH rose for seventh day and challenged its 100-day moving average after Chinese Vice Premier He Lifeng expressed concerns over U.S. tariffs, while PBOC advisor Huang Yiping said there was significant room to stimulate the economy.
Treasury yields were up about 3 basis points. The 2s-10s curve was up about 2 basis points to +29.7bp.
The S&P 500 fell 1.3%, dragged down by tech shares.
Oil prices rose 1% following EIA data showing a drop in crude inventories and on concerns about tighter global supply.
Gold was little changed while Comex copper rose 0.5%, hitting a fresh record on U.S. tariff fears.
Heading toward the close: EUR/USD -0.32%, USD/JPY +0.36%, GBP/USD -0.46%, AUD/USD -0.22%, =USD +0.31%, EUR/JPY +0.04%, GBP/JPY -0.11%, AUD/JPY +0.16%.(Editing by Burton Frierson Reporting by Robert Fullem)
