EUR/USD: US consumer sentiment under scrutiny

Approaching a crucial technical threshold, the EUR/USD is experiencing intense volatility amid low visibility on both the monetary and tariff fronts. As a reminder, the US Supreme Court struck down the so-called "reciprocal" tariffs imposed by the White House on its main trading partners. In the wake of this ruling, the volatile occupant of the Oval Office announced a replacement tariff of 10%, later increased to 15%.

These tariffs had served as the basis for negotiations leading to a series of trade agreements with key US partners, including the European Union, Japan, and the United Kingdom. However, the judges did not rule on the extent of the refunds to which importers might be entitled. At most, the federal government could owe $169 billion, representing more than half of the customs revenue generated by the tariffs imposed by the US president, reports Bloomberg.

The European Union was quick to react, with the European Parliament suspending the implementation of the trade agreement between Brussels and Washington on Monday, pending clarification from Washington on the consequences of the US Supreme Court's decision.

"With a vote of 6 to 3, the Supreme Court has recognized the unconstitutionality of the tariffs unilaterally imposed by Tariff Man under the International Emergency Economic Powers Act (IEEPA). The decision is all the more difficult for Tariff Man to accept given that two of the three justices it appointed voted for the illegality of these 'reciprocal tariffs.' While the decision does not (yet) force the U.S. Treasury to reimburse the tariffs collected - a theoretical risk estimated at over $170 billion in the worst-case scenario - it paves the way for a proliferation of lawsuits (already more than a thousand legal actions underway, including that of COSCO). Judge Brett Kavanaugh's statement that such reimbursement was unlikely will not be enough to limit these appeals, and besides, that is neither within the purview of SCOTUS nor Judge Kavanaugh," explains Sebastien Grasset, CEO of Auris Gestion's Asset Management division.

The week began calmly on the economic front, with the Ifo Business Climate Index for Germany, the Eurozone's largest economy, coming in at a firm level, but very close to expectations. "Business confidence in Germany has improved. The Ifo Business Climate Index rose in February, reaching 88.6 points, compared to 87.5 points in January. Companies were more satisfied with their current situation. The outlook also improved. The German economy is showing the first signs of recovery," explains Clemens Fuest, President of the Ifo Institute.

"The massive stimulus package presented by Berlin a year ago is beginning to bear fruit. The first part of the 1 trillion euro pledged was disbursed at the end of 2025. We expect Germany to finally emerge from economic stagnation this year with growth of 1.4%, compared to 1.1% for the eurozone," comments Christopher Dembik, Investment Strategist at Pictet AM.

Currency traders will be closely watching the release of the Conference Board consumer confidence index at 16:00 (EU time), expected to remain firm, with a slight increase to 87.3.

"This week will be marked by the release of the Conference Board's consumer confidence index, a useful barometer of the strength of domestic demand following the slowdown in Q4 2025. Several tech and AI giants will publish their results, providing an important test of the sustainability of the digital infrastructure investment cycle. Meanwhile, industrial and logistics groups will be closely watched: their outlook could reflect the impact of geopolitical tensions in the Middle East," adds Sebastien Grasset.

It's worth remembering that consumption remains, structurally, the main driver of national wealth creation in the United States. And the Fed is watching every early sign of changes in consumer sentiment very closely.

"For the past few months, consumer confidence has been falling. This is certainly linked to the slowdown in the labor market. For now, this doesn't call into question the positive momentum of the US economy, which is driven by massive investments in AI. But it's a point of vulnerability that shouldn't be overlooked in the coming months and could prompt the Fed to lower its key interest rates more than expected," anticipates Christopher Dembik, investment strategist at Pictet AM.

Right now, the EUR/USD is trading at $1.1776