Forex overview: Tariff Spillover Remains Local – ForexNews.PRO
The introduction of a 50% tariff initiated by Trump against Brazil, which imports goods from the United States, is probably related to the accusations against former President Jair Bolsonaro, which puts significant pressure on the Brazilian real. However, global risk sentiment and the US dollar have not yet been seriously affected. News about the EU-US trade deal is expected in the coming days, but its impact on EUR/USD may be limited.
It seems that Trump’s letters to trading partners primarily affect local markets, rather than the market as a whole. Yesterday’s unexpected announcement of a 50% tariff for Brazil caused a massive sale of the Brazilian real. The main problem is that the tariff appears to be related to the accusations against former President Jair Bolsonaro (which Trump considers unfair), while the US has a trade surplus with Brazil. The focus is now on whether any trade negotiations will include U.S. demands related to Bolsonaro, which could prove to be a serious political obstacle and put additional pressure on the Brazilian real.
The dollar lost a bit of value today, but mostly remains aloof from the tariff chaos. At the moment, we maintain a neutral short-term view of the dollar. The question is what needs to happen for the dollar to take Trump’s tariff maneuvers seriously.
The volatility of EUR/USD returned to below 7.0 in 1 week, which confirms the increased caution of the markets regarding Trump’s tariff statements. A trade deal between the US and the EU is expected, and if there are no major surprises in the details of the deal, EUR/USD may remain in the region of 1.170-1.175.
