empty
28.02.2025 12:34 AM
The Dollar Is Currently Facing Significant Challenges

Concerns about the state of the US economy are hindering bearish sentiment in the market for EUR/USD. According to Danske Bank, the major currency pair lacks serious catalysts to move out of its current consolidation phase and is expected to continue fluctuating around the 1.05 mark.

President Donald Trump is either imposing tariffs or delaying their implementation. The 25% import duties on Mexico and Canada were initially set to take effect on February 1 but have since been postponed to March 1. Trump's team will discuss the matter on April 2. However, sources have indicated to Bloomberg that the timeline is still uncertain. Trump could choose to impose the tariffs either in April or March. Additionally, his announcement of introducing 25% tariffs on the European Union has reignited investor interest in selling EUR/USD.

Unfortunately, the enthusiasm of the bears regarding the euro was short-lived. The major currency pair has quickly recovered as signs of a slowdown in the U.S. economy come to light. Data on retail sales, business activity, and consumer confidence support this trend. Consequently, the short-term market is starting to believe that the Federal Reserve is shifting its focus from inflation to GDP, as indicated by the movements in U.S. Treasury yields.

U.S. Bond Yield Dynamics

This image is no longer relevant

Atlanta Fed Bank President Rafael Bostic has argued that since the Fed has already met its employment target, it's time to focus on inflation. This perspective seems to contradict current market signals and recalls the strength of the US dollar. According to Societe Generale, this approach may be misguided, as current EUR/USD quotes are near fundamental levels, indicating limited potential for significant fluctuations in this major currency pair.

Moreover, the uncertainty surrounding tariffs introduced by Donald Trump and his administration has provided support for the US dollar. However, investors are well aware of the potential consequences of trade wars and an elevated federal funds rate, which could lead to a hard landing. This is evidenced by the caution exhibited by the bulls in the EUR/USD market.

This image is no longer relevant

Will the upcoming releases of GDP and the U.S. Personal Consumption Expenditure (PCE) index serve as catalysts to break the major currency pair out of its short-term consolidation range? Personally, I highly doubt it. Both indicators are lagging. This is particularly true given that we are not dealing with the first estimate of gross domestic product. Furthermore, even a slowdown in the PCE is unlikely to alter the market's perception of the Fed's monetary expansion actions in 2025.

From a technical standpoint, the daily EUR/USD chart shows continued short-term consolidation near the upper boundary of the fair value range, which spans from 1.0340 to 1.0515. A breakout above the resistance level at 1.0515 could increase the likelihood of an uptrend resuming, presenting a buying opportunity for the Euro. Conversely, a successful move below the support level at 1.0450 would signal a basis for selling.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

Gold is attracting some sellers for the second day in a row, despite the absence of any clear fundamental catalyst for a decline. Most likely, this is due to trading

Irina Yanina 11:50 2025-04-04 UTC+2

Old market rules broken

Someone is not telling the truth. Donald Trump insists that everything is going well and that the markets will flourish. But the S&P 500 just posted its worst 10-week start

Marek Petkovich 11:10 2025-04-04 UTC+2

The Growth of the Gold Price Has Stopped. What Is the Reason? (There Is a Possibility of a Local Corrective Pullback in #SPX and Bitcoin)

The global market crash triggered by the announcement of sweeping tariffs personally introduced by the U.S. President continues into Asian trading sessions. While the decline has slowed, there is still

Pati Gani 09:09 2025-04-04 UTC+2

What to Pay Attention to on April 4? A Breakdown of Fundamental Events for Beginners

Only a few macroeconomic events are scheduled for Friday, but they may trigger a new storm. The market has not yet recovered from Wednesday evening's events when Trump imposed trade

Paolo Greco 07:29 2025-04-04 UTC+2

GBP/USD Pair Overview – April 4: Does Anyone Still Care About Nonfarm Payrolls and Unemployment?

The GBP/USD currency pair posted a 300-pip upward move from Wednesday evening through Thursday. Given the current situation, this may not end the dollar's decline. To be honest, the fall

Paolo Greco 06:07 2025-04-04 UTC+2

EUR/USD Pair Overview – 4: Trump's Tariffs Crash the Dollar Once Again

The EUR/USD currency pair gained nearly 300 pips between Wednesday and Thursday. We saw a repeat of the situation in early March when the U.S. dollar fell by 400 pips

Paolo Greco 06:06 2025-04-04 UTC+2

The Dollar Shot Itself in the Foot

Don't create a problem for someone else; you might get caught in it yourself. Donald Trump sought to leverage the United States' leading position in the global economy by announcing

Marek Petkovich 00:50 2025-04-04 UTC+2

EUR/USD. Nonfarm Payrolls and the Greenback

Can strong Nonfarm Payrolls help the dollar? This question is complicated, as the market is currently too shaken by Donald Trump's new tariffs. Traditional fundamental factors have been pushed into

Irina Manzenko 00:46 2025-04-04 UTC+2

USD/JPY – Analysis and Forecast

The Japanese yen is showing strong gains amid broad-based selling of the U.S. dollar, keeping the USD/JPY pair below the key psychological level of 147.00. Investor concerns over the potential

Irina Yanina 18:22 2025-04-03 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.