EUR/USD: Range-bound movement as tariff changes alter perspective – Nordea

Stable Currency Markets Amid US Tariff Adjustments

Jan von Gerich from Nordea observes that the EUR/USD exchange rate has shown little movement, as investors process the recent US Supreme Court decision on tariffs and the introduction of new replacement duties. He points out that the newly implemented US tariffs, set between 10% and 15%, result in only a marginal decrease in the average effective tariff rates. The subdued response from financial markets indicates that there is no immediate reason to revise current economic or market projections.

Tariff Changes Have Minimal Impact on FX Projections

“Over the past week, market activity has been relatively uneventful. Long-term bond yields have edged slightly lower, the EUR/USD pair has remained mostly unchanged, and equity markets have experienced some volatility due to ongoing debates about AI’s influence on various industries.”

“If the new tariff rate reaches 15%, estimates from the Yale Budget Lab suggest that the average effective tariff will decrease by only a few percentage points compared to the previous IEEPA tariffs.”

“The market’s muted reaction to the Supreme Court’s ruling implies that the overall market outlook remains largely unchanged.”

“Therefore, it would be premature to make significant adjustments to economic or market forecasts at this stage.”

“Within the euro area, the recent tariff modifications introduce some downside risks due to heightened uncertainty. However, the actual impact may be limited. Notably, the eurozone economy outperformed more pessimistic expectations last year, even when tariff-related uncertainty was at its peak.”

“We continue to expect the European Central Bank to keep rates steady throughout the year, as recent data suggest that the manufacturing sector is gradually improving.”

(This article was produced with the assistance of artificial intelligence and subsequently reviewed by an editor.)