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Investing.com -- The European Union appears divided in its approach to potential US tariff threats, with Germany reportedly seeking a quick resolution while France and Spain prefer a tougher stance.
According to ING analysis, financial markets might expect White House threats of broad 50% tariffs against the EU, though such rhetoric may not significantly impact the EUR/USD exchange rate for long periods.
The EU is currently working to negotiate reductions on proposed US tariffs, including 50% on steel and aluminum, 25% on cars, and potential tariffs on pharmaceuticals that would particularly affect Ireland. Friday’s news that Switzerland is close to reaching a pharmaceutical deal with the US boosted healthcare stocks, potentially signaling a positive development for EU negotiations.
ING analysts suggest the EUR/USD is likely to consolidate within a 1.1700-1.1830 range this week rather than experiencing another significant rally. They note an outside risk to the 1.1900/1.1910 area if Washington misjudges market sentiment, though this scenario seems unlikely.
The eurozone economic calendar remains light this week. However, Friday’s expected passage of nearly €50 billion in fiscal stimulus through the German upper house could remind markets of improving domestic demand prospects in Europe, which ING considers a multi-year positive factor for EUR/USD.
Reports indicate negotiations might receive a two-month extension, giving both sides more time to reach an agreement.
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