Since US President Trump’s reciprocal tariffs address on April 2, the EUR is the second best performing G10 currency after the safe-haven CHF, Rabobank's FX analyst Jane Foley reports.

EUR holds ground amid tariff turmoil

"The EUR’s resilience has stemmed from the optimism triggered by the relaxation in Germany’s debt brake in March and by the broad-based assumption that this was a game changing event for the region. The EUR was boosted further by the rotation out of US assets triggered by fears that Trump’s tariffs could push the US into recession and trigger a spike in inflation."

"The rotation trade has since stalled. But, while the S&P 500 has made a series of new record highs since June, the USD continues to drag its feet, undermined by expectations of more aggressive Fed rate cuts."

"RaboResearch has adjusted its forecasts and now sees four Fed rate cuts in 2026 in addition to a cut in September. That said, the move is mostly priced in and, since there is a lot of good news reflected in the EUR, we remain reluctant to push our EUR/USD forecast beyond our 1.20 target, though we have brought it forward to a 9-month view. Indeed, assuming fears of US recession continue to recede, we continue to see risk of short-covering pressure in favour of the USD on a 1-to-3-month view and forecast a dip to EUR/USD1.15."