Nordea’s Jan von Gerich notes that EUR/USD has traded largely sideways as markets digest the US Supreme Court ruling on tariffs and subsequent replacement levies. He argues that the new 10–15% US baseline tariffs leave average effective rates only slightly lower, and that muted market reaction suggests no need to change existing economic or market forecasts.

Tariff reshuffle leaves FX outlook steady

"The market action over the past week has been far from spectacular. Long bond yields have crept somewhat lower, EUR/USD has moved largely sideways, while speculation on the probable impact of AI on different sectors has caused some swings in the equity market."

"Assuming the new rate rises to 15%, the average effective tariff rate will fall only by a few percentage points compared with the IEEPA tariffs, according to estimates by the Yale Budget Lab."

"The market reaction to the court decision was rather muted, suggesting that the outlook has not changed materially."

"It would thus be premature to make any major changes to economic or market forecasts."

"In the euro area, the recent tariff changes present some downside risks given increased uncertainty, but the impact could prove to be limited. After all, also the euro-area economy defied the more negative forecasts last year when tariff uncertainty was at its highest. "

"We remain comfortable with our ECB forecast of there being no rate moves this year as recent data raise hopes that also the manufacturing sector is gradually doing better."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)