Supreme Court Blocks Trump Tariffs, Sparks Forex Chaos
Robert J. Williams 
Alexandra Winters 
A seismic U.S. Supreme Court ruling on February 20, 2026, has unleashed chaos in forex markets, invalidating President Trump’s broad tariffs under the International Emergency Economic Powers Act (IEEPA) in a 6-3 decision. Chief Justice John Roberts wrote that IEEPA’s power to “regulate importation” does not extend to imposing tariffs, a taxing authority reserved for Congress under the Constitution. Hours later, Trump pivoted with an executive order imposing 10% global tariffs under Section 122 of the Trade Act of 1974 for 150 days, amid signals of a potential hike to 15%.
This flip-flop has traders scrambling, driving sharp volatility across major pairs as of February 24, 2026.
Key Market Moves Amid Tariff Turmoil
- USD/JPY Breaks Higher: The pair surged to 154.91 in Asian sessions, breaking 154.00 resistance and eyeing 155.75 or even 157.00. Yen weakness persists despite Bank of Japan rate hike bets, overridden by safe-haven reversals and U.S. policy flux.
- GBP/JPY Range-Bound: Recovered above 209.00 but stuck in a two-week range, capped at 209.60-209.65. Policy divergence—BoJ tightening vs. BoE cuts—fails to lift it amid risk-off tariff fears.
- EUR/USD Steady: Up 0.1% at 1.1788, holding 1.1750-1.1760 support. ECB’s Christine Lagarde called rates a “good place,” muting moves despite global jitters.
Broader Asset Ripples
Precious metals shine as havens: Gold exceeds $5,100, targeting $5,300; silver nears $90/oz with Gold/Silver ratio compressing to 60x. WTI oil hovers at $67/bbl, buoyed by U.S.-Iran tensions and Strait of Hormuz risks but pressured by trade slowdowns. Equities tumbled—S&P 500 down 1.04%, Dow 1.74%—with VIX spiking 10%.
Expert Reactions and Policy Pivot
Jennifer Hillman, Senior Fellow at the Council on Foreign Relations, noted the ruling reaffirms Congress’s taxing power, leaving IEEPA intact for sanctions but not tariffs. The Peterson Institute highlighted Section 122’s limits: nondiscriminatory, temporary tariffs complicate bilateral deals. Prior tariff pacts with Australia and UK face uncertainty under the new regime.
Forex Analysis: Volatility as the New Normal
The ruling constrains executive overreach but amplifies uncertainty—will 10% tariffs stick, or escalate to 15%? Forex pairs like USD/JPY show bullish MACD signals but caution near overbought levels. Safe-havens (yen, gold) initially rallied then faded, signaling risk reassessment. Expect elevated volatility until Trump’s State of the Union clarifies implementation.
Looking Ahead: Catalysts to Watch
- ADP jobs, consumer confidence data today.
- Fed speakers, BoE testimony on rate paths.
- U.S.-Iran talks, tariff refunds process.
Traders should brace for swings pending policy resolution.
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