EUR/USD experienced a temporary increase to 1.0900 on Tuesday before retracing to previous levels. Market reaction to the Trump administration’s tariff announcements on Wednesday was muted. While economic data is secondary to tariff concerns, the upcoming Non-Farm Payroll (NFP) report remains significant. The EUR/USD pair initially strengthened following the tariff announcement, which was perceived as less aggressive than anticipated given recent statements. The proposed tariffs include a 10% levy on all imports, a 25% tariff on automobiles and parts, and varying reciprocal tariffs based on country of origin. Further tariffs on essential imported consumer products, such as copper and microchips, are also under consideration. These measures are expected to increase consumer prices and contribute to sustained inflationary pressures due to limited alternative sourcing options. Federal Reserve officials anticipate that uncertainty surrounding trade policies will likely contribute to maintaining elevated interest rates for a longer duration than previously projected.
