On Friday, major currencies exhibited stability as traders evaluated the implications of the latest U.S. Producer Price Index (PPI) data and potential reciprocal tariffs proposed by Washington. The U.S. dollar remained near a three-week low, influenced by these economic developments.

President Donald Trump has directed his economic team to develop plans for reciprocal tariffs on countries that impose taxes on U.S. imports. While this move signals a firm stance on trade, the absence of immediate implementation has led to cautious optimism among traders.

The market is closely monitoring how these potential tariffs might affect global trade dynamics and currency valuations.

The recent U.S. PPI report further influenced currency markets. Although the headline PPI exceeded forecasts, detailed components suggest that core Personal Consumption Expenditures (PCE) inflation, the Federal Reserve's preferred measure, may be lower than anticipated for January.

This development has alleviated some inflation concerns, contributing to the dollar's steadiness.

In the broader currency landscape, the euro reached a two-week high, buoyed by optimism surrounding potential peace talks between Ukraine and Russia. Similarly, the British pound strengthened, achieving its highest level since January 7. The Japanese yen and the Canadian dollar also experienced gains, partly due to declining U.S. Treasury yields.

Market participants are adopting a cautious approach, balancing the positive signals from the PPI data against the uncertainties associated with prospective U.S. tariff policies.

The interplay between these factors continues to shape currency movements, with traders remaining vigilant as they navigate the evolving economic landscape.