A Supreme Court decision against Trump-era tariffs could slightly strengthen the USD. This may improve global risk sentiment, helping high-beta currencies like the AUD and NZD. Although the EUR/USD has signals of being undervalued in the short term, it may move towards 1.1600. There are also signs of unusual activity in the EUR/DKK forwards, hinting at speculative moves and potential intervention by the Danish central bank. The ruling might positively impact the dollar, while currencies like the AUD and NZD could benefit from a brighter global trade outlook. The euro, which briefly gained from tariff-related disruptions, could face challenges if tariffs are removed. Even though EUR/USD shows short-term undervaluation, it still risks falling towards the 1.1600 support level.

Unusual EUR/DKK Activities

There is unusual trading in EUR/DKK forwards, indicating speculative selling of the DKK. This could relate to recent Greenland-related news and liquidity concerns that may lead the Danish central bank to intervene. Currently, the currency pair remains just below 0.2% over the 7.460 peg, with sufficient reserves for the central bank to buy DKK before raising rates. The Supreme Court is set to hear arguments next month regarding the Trump-era tariffs, which could result in a slightly stronger dollar. If these tariffs are overturned, it would positively impact global trade, already showing signs of improvement with the WTO Goods Trade Barometer rising to 101.2 in the last reading for 2025. This would make dollar-denominated assets more appealing in the near future. Although our models indicate that EUR/USD is undervalued, with fair value around 1.1900, the pair could still drop towards the 1.1600 support level. Currently, the euro is trading at about 1.1730. Any increase in global risk appetite from tariff removal typically benefits other currencies more than the euro. Traders should remain cautious about this downside risk, despite the apparent undervaluation.

High-Beta Currency Dynamics

We believe that high-beta currencies, such as the Australian and New Zealand dollars, will benefit the most from a more optimistic global trade outlook. At the end of last year, Australia’s export data for December 2025 was unexpectedly robust, and recent Chinese industrial production surpassed expectations. These currencies are poised to excel if trade barriers are officially lowered. The euro, which saw significant gains due to trade uncertainty when tariffs were introduced in 2018 and 2019, may weaken if tariffs are suspended. Historically, the euro acted as a safe haven during those turbulent times. A reversal of this circumstance could undo some of its previous gains against the dollar and other currencies. We are also monitoring the unusual activity in EUR/DKK forwards, reflecting speculation based on recent geopolitical events. The Danish central bank has enough resources to defend the 7.460 peg, with foreign exchange reserves exceeding DKK 650 billion as of December 2025. This indicates they would intervene to buy kroner well before considering any rate increase. Create your live VT Markets account and start trading now.

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