The EUR/USD exchange rate has experienced a slight depreciation ahead of the anticipated tariff announcement. However, observed price action indicates robust buying interest below the 1.080 level, suggesting a market reluctance to fully incorporate a negative, tariff-driven Euro outlook, according to Francesco Pesole, FX analysts at ING. ING’s analysis posits that the Euro should reflect a greater degree of downside risk associated with potential tariffs. Their models indicate that the current EUR/USD rate of 1.080 does not incorporate any risk premium. The implementation of a comprehensive 20% tariff could strengthen the rationale for a EUR/USD decline. Nevertheless, a more pronounced impact on the Euro’s perceived safe-haven status against higher-beta currencies may necessitate more aggressive targeting of EU products or specific member states.
