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

USD/JPY. Analysis and Forecast

The USD/JPY pair is showing moderate weakness on Monday, dropping toward the psychological level of 144.00. The decline is driven by a combination of factors, including the strengthening

Irina Yanina 14:05 2025-06-09 UTC+2

WTI - West Texas Intermediate. Analysis and Forecast

At the start of the new week, prices for West Texas Intermediate (WTI) crude oil are attempting to stay near Friday's highs. Senior U.S. officials, including Treasury Secretary Scott Bessent

Irina Yanina 14:02 2025-06-09 UTC+2

Old Donald the Fighter Seems to Have Broken Down (there is a likelihood of continued growth in CFD contracts #NDX and #SPX)

Despite all the hardships, uncertainty, and overall market tension, stock indices persistently climb higher. Investors believe that Donald Trump will have to back down and retreat in his confrontation with

Pati Gani 10:06 2025-06-09 UTC+2

China and the U.S. Take a Serious Step Toward Each Other

The euro and the pound have recovered from Friday's losses, gradually resuming their upward movement. This is supported by the resumption of U.S.-China negotiations today, aiming to further ease tensions

Jakub Novak 09:21 2025-06-09 UTC+2

What to Pay Attention to on June 9? A Breakdown of Fundamental Events for Beginners

No macroeconomic reports are scheduled for Monday. Thus, traders will have nothing to react to during the day. There is a high probability of flat or weak movements unless Donald

Paolo Greco 05:54 2025-06-09 UTC+2

GBP/USD Overview – June 9: Nonfarms Did Not Disappoint

The GBP/USD currency pair also traded lower on Friday and even settled slightly below the moving average line. While we constantly say there are no reasons for the pound

Paolo Greco 04:03 2025-06-09 UTC+2

EUR/USD Overview – June 9: A New Episode of the "American Circus"

The EUR/USD currency pair traded with a slight decline on Friday, which was driven by decent macroeconomic data from the U.S. However, reports from the Eurozone also turned out quite

Paolo Greco 04:03 2025-06-09 UTC+2

EUR/USD. Weekly Preview. Inflation and More Inflation

The upcoming trading week will revolve around American inflation. In the United States, data will be published on the growth of the Consumer Price Index (CPI), the Producer Price Index

Irina Manzenko 02:39 2025-06-09 UTC+2

U.S. Dollar: Weekly Preview

In the United States, as usual, there will be far more interesting events and news than in the Eurozone or the United Kingdom. Economic data will start arriving on Wednesday

Chin Zhao 00:55 2025-06-09 UTC+2

British Pound: Weekly Preview

In the United Kingdom, the news background for the upcoming week will be much more interesting, although I do not believe it will significantly impact market sentiment. The pound continues

Chin Zhao 00:55 2025-06-09 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.