Forex analytics. Will tariffs harm the dollar?
While commodity markets are following the twists and turns of events in the Middle East, stock markets are talking about the dangers of artificial intelligence, Forex cannot come to a consensus on the impact of tariffs on the US dollar. 34% of MLIV Pulse investors believe that it is necessary to stay away from the greenback. Before the verdict of the Supreme Court on the illegality of import duties, there were 29% of them. It turns out that the return of previously received fees to the United States is a negative for the “bears” on EURUSD?
According to Bloomberg estimates, Washington will have to give away about $170 billion, which will negatively affect the budget, government debt, raise treasury yields and hit the US dollar. The Bank of Nassau notes that a reduction in the average tariff rate will slow down inflation. This will allow the Fed to accelerate the process of easing monetary policy and create a tailwind for the EURUSD. Moreover, investors are wary of Kevin Warsh as the new head of the central bank. At the same time, the futures market expects a reduction in the federal funds rate not only in 2026, but also in 2027.
Brown Brothers Harriman believes that the verdict of the Supreme Court will not affect the US dollar at all. New tariffs have been added instead of the old ones. Why shouldn’t markets and economies adapt to them as they did to previous ones? Indeed, no one is in a hurry to sell Treasury bonds due to concerns about the United States’ budget and public debt problems. Treasury yields have fallen to their lowest levels since November.
Finally, the “bears” on EURUSD believe that the return of tariffs is a kind of fiscal incentive for the US economy, since the Americans paid the lion’s share of them. In addition, the Supreme Court’s verdict on the illegality of import duties undermines presidential power. This means that it will not be so easy for Donald Trump to lower rates.
Discussions are in full swing, which, against the backdrop of the roller coaster of the S&P 500 and oil, leads to a consolidation of the EURUSD. Moreover, the futures market cannot decide on the month of the resumption of the Fed’s monetary expansion cycle. An increase in the number of applications for unemployment benefits has increased the likelihood of a reduction in the federal funds rate in June from 46% to 51%. This weakened the position of the US dollar.
Until investors come to a consensus on the impact of tariffs on the greenback, it will be difficult for the main currency pair to leave the boundaries of the 1.1765-1.1835 trading channel. It is likely to be influenced by events in the Middle East and the release of US labor market data for February.
