EUR/USD to be political football if 'Europe united' vs US
Nov 27 (Reuters) - EUR/USD could be kicked up and down the metaphorical FX pitch if the mooted imposition of U.S. tariffs on imports from the European Union leads to "Europe united" taking on opponents wearing "America First" shirts.
German foreign minister Annalena Baerbock on Tuesday flagged "Europe united" as a response to any decisions taken by Donald Trump's incoming U.S. administration that have an "America First" focus.
Although "Europe united" boasts the euro in its defence, "America First" possesses the star player from either side in the form of the dollar, the world's reserve currency.
"Europe united" might therefore have to play a catenaccio-style game to avoid defeat against a bigger opponent, re: tariffs and trade.
A heavy defeat might take the form of EUR/USD sinking to 0.90 for the first time since 2002.
It would be a big surprise, and positive for the euro, if Trump does not impose tariffs on EU imports to the U.S., given his pre-election threat that the EU would pay a "big price" for not buying enough American exports.
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(Robert Howard is a Reuters market analyst. The views expressed are his own)
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