Euro to Dollar Rate JUMPS as US Court Blocks Trump Tariffs

May 29, 2025 - Written by Tim Boyer

STORY LINK Euro to Dollar Rate JUMPS as US Court Blocks Trump Tariffs

Overnight, the US Court of International Trade ruled that President Trump’s Liberation Day Tariffs implemented under the International Emergency Economic Powers Act (IEEPA) were unconstitutional.

The dollar surged in immediate response with the Euro to Dollar (EUR/USD) exchange rate sliding to 1.1210 before a recovery to 1.1275 as markets reacted to the injection of another wave of uncertainty.

Dollar selling pressure could ease, especially in Asia, but immediate pressure on the EU to make trade concessions will also ease and there are major uncertainties over the US response which will have an important impact on political and economic decisions.

According to MUFG; “What we can be sure of is that Trump won’t take this sitting down and is likely to push on and use other options to extract better trade deals. So this rebound of the US dollar will have its limits.”

ING commented; “We think global asset managers did have a shock in April and are seriously looking at their dollar hedge ratios. But the news flow is mildly supportive for the dollar and there is a scenario where EUR/USD can make it back to the 1.1050 area – consistent with our baseline views for this year that EUR/USD traces out a 1.10-1.15 range.”

UOB noted; “To continue to decline, EUR must first close below 1.1200. The risk of EUR closing below 1.1200 will remain intact provided that the ‘strong resistance’ level, currently at 1.1355 is not breached.”

According to the ruling, global tariffs exceeded Trump’s authority under the emergency law and could only be approved by Congress.


Industry-specific tariffs on steel and aluminium were not affected.

The Administration immediately appealed against the decision and the legal wrangling could extend to the Supreme Court through a lengthy process.

Trump could look to impose tariffs through alternative trade legislation, although the process would inevitably be complicated.

According to Deutsche Bank; “If the ruling did remain in place, preventing the use of tariffs under IEEPA, one option for the administration would be to expand the use of other tariff instruments, like the Section 232 on national security grounds, which have been used for autos, steel and aluminium tariffs.”

MUFG added; “What action is taken in the immediate future is unclear and today we may get a sense of the speed in which action can be taken to appeal and reverse the ruling but the 9th July reciprocal date and the date in August for China are obviously now in doubt.”

There will be important implications for EU-US trade negotiations with the EU, for example, seeing less immediate urgency to make concessions.

MUFG commented; “For sure though the leverage the Trump administration trade representatives have in their negotiations with trading partners has just gone down.”


XTB research director Kathleen Brooks commented; “Sell the dollar was one of the biggest ‘tariff trades’, so now that tariffs are in jeopardy, an unwind of this position is to be expected. However, for now, losses in the euro vs. the dollar have been minimal so far.

Elsewhere, ING noted that minutes from May’s Federal Reserve policy meeting were relatively hawkish with comments that almost all participants on the committee noted the risk that inflation could be more persistent than expected.

Markets consider that there is only a 20% chance of a Fed rate cut in July.

There will be renewed uncertainty surrounding the economy as a whole and there will also be an impact on budget revenue.

According to TD Securities rates strategist Prashant Newnaha; With tariffs now in the appeal process and likely heading to the Supreme Court, uncertainty is back. Expect to see this lead to delays in investment and hiring. The pause also puts tariff revenue at risk which could bring deficit issues back on the radar.”

ING commented; “the risk premium in US Treasuries may be one of the factors preventing a more whole-hearted rally in the dollar.”

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TAGS: Euro Dollar Forecasts