Citigroup: The tariff deadline may be a "non-issue" for G10 currencies, but attention should be paid to Japan

Citigroup's foreign exchange strategists believe that, to a large extent, the upcoming July 9 tariff negotiation deadline may be a "non-event" for G10 currencies. From the EU perspective, Citigroup's baseline forecast is that both sides will reach a framework agreement before July 9, at which point the 10% tariff rate will be extended, and negotiations will continue. "Given the recent strengthening of the euro, they speculate that such news will slightly benefit the euro, but it may not be a significant driving factor, as much of the good news has already been reflected in the euro's price." Regarding Japan, Citigroup believes that, in light of Trump's recent comments, the likelihood of reaching an agreement is decreasing. Citigroup stated, "The risk of a tariff increase on Japan seems to be the highest." The bank expects the USD/JPY to rise to 150 this summer, before falling below 140 later this year, as the Bank of Japan is expected to implement policy normalization, leading to a recovery in the yen's strength