The Euro-to-Dollar exchange rate fell by 0.7% following overnight news that US President Donald Trump has 10 days to withdraw a large part of his tariff plan, fuelling expectations of a longer postponement before full enforcement.

The Dollar gained strongly after the US Court of International Trade ruled that Trump lacked the authority under the International Emergency Economic Powers Act (IEEPA) to impose the tariffs.

The court ruled that trade deficits do not qualify as the “unusual and extraordinary threats” necessary to justify the use of emergency powers under IEEPA.

“EUR/USD is understandably lower on the US tariff news in that it slightly re-appraises US growth prospects and the risk premium attached to the Dollar,” said Chris Turner, lead FX analyst at ING Bank.

Trump invoked the IEEPA to bypass Congress in imposing broad tariffs, prompting investor concerns about a potential major slowdown in the US economy.

Meanwhile, the Euro gained attractiveness as an alternative to the Dollar, causing the Euro-Dollar exchange rate to rise significantly in 2025. “We think the Euro is continuing to benefit from being the most liquid alternative to the Dollar. There is also evidence that portfolio re-allocation is helping the Euro,” Turner added.

The court’s ruling to block the most aggressive parts of Trump’s tariff plan brought relief to the Dollar and stalled the Euro’s recent rally. Ironically, the Euro stands to benefit greatly from this decision, as it significantly weakens Trump’s position in ongoing trade talks with the EU, Pound Sterling Live reports.

For the moment, the Dollar’s relief is most pronounced, with the daily EUR/USD chart revealing a weakening technical outlook that hinders a push back to the 2025 highs near 1.1550.

However, three consecutive days of declines signal a warning that the Euro’s recovery effort may have faltered, increasing the likelihood of a drop toward 1.1150, where the 50-day moving average lies.

Current price movements suggest the rally may have stalled, indicating a likely shift toward an extended period of sideways, consolidative trading.

“The newsflow 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,” Turner continued.