April 25, 2025 – Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: US Equities “Could Drag EUR/USD to 1.1250”

The US Dollar has made some headway on Friday with gains against the Euro and across all other majors amid hopes that the US Administration is backing away from the more destabilising policy stance.

According to Scotiabank; “Technicals remain bullish given the clear sequence of higher lows and higher highs. The near-term range is roughly bound between support in the upper 1.12s and resistance around 1.1550.”

ING commented; “What we would say is that some further modest advance in US equities could drag EUR/USD back to the 1.1250 area.”

ING added; “it may be there – 1.1250 – where all the ‘structural’ dollar sellers could re-emerge if you believe Washington’s destruction of the rules-based international order has permanently damaged the dollar’s status as the leading reserve currency.”

Overall risk appetite has continued to settle on Friday amid hopes that the US can make headway on trade deals and, potentially, lower the temperature with China to some extent.

Recently, the dollar has tended to benefit when risk conditions improve.

ING commented; “Over recent weeks we had mentioned that an extreme 5-6% risk premium in the dollar could see EUR/USD briefly trade 1.15/16 – which we saw on Monday – but that risk premium is now starting to come out of the dollar as the mood music on trade improves and the President has backed Fed Chair Jerome Powell.”

There is still a high degree of uncertainty across the board, especially given White House spin.

MUFG remained cautious; “Even if reports are correct that there will be some easing of tariff rates, a hit to US growth is still coming that will ensure volatility levels remain higher, equity markets are pressured to the downside and the global backdrop remains unfavourable for any sustained move higher.”

According to Scotiabank; “Trade hopes spring eternal for markets but it is far from clear that there are grounds for any real optimism at this point. China is playing the long game and the position the US has left itself in suggests few will be rushing to make any concrete trade deals any time soon.”

Geo-political considerations will also be monitored closely with markets monitoring the Russia-Ukraine war developments closely.

The US is pushing for a rapid move towards a deal and any evidence of a credible ceasefire could underpin the Euro, but there are still major barriers to a deal.

As far as data is concerned, there was a small recovery in the April University of Michigan consumer confidence index to 52.2 from the flash reading of 50.8, but still below the March reading of 57.0.

The ECB policy stance has remained dovish with council member Holzmann stating that a 50 basis-point cut was possible for June.

Markets have now fully priced in a 25 basis-point cut at that meeting.

As far as the Federal Reserve is concerned, markets are pricing in a 60% chance of a June rate cut. Cleveland Fed President Hanmmack stated that a June cut was possible if there was clear and convincing data.

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TAGS: Euro Dollar Forecasts

Created on April 25, 2025

• On Thursday, we have seen the British pound dip slightly against the Japanese yen, only to turn around and show signs of life again.
• By doing so, the market looks as if it is trying to turn to the upside and perhaps continue the recovery that we have seen over the last several days.
• This suggests a little bit of a “risk on move” in the markets, and of course we have seen play out in the equity markets as well, so this is not a huge surprise.

The Bank of Japan can do very little to tighten monetary policy, so the interest rate differential will continue to be quite large between these 2 currencies. If that is going to be the case, then it makes sense that the British pound continues to see success against the Japanese yen. The pair is notorious for being very volatile, and if we suddenly get a lot of risk on behavior around the world, I think that bodes quite well for higher pricing.

Technical Analysis

The technical analysis for this GBP/JPY pair is becoming more and more bullish each day, and the fact that we could not hang on to a selloff during the trading session tells me that this is a pair that is likely to continue higher given enough time. This doesn’t necessarily mean that we need to be extraordinarily explosive to the upside, but I think it does suggest that we are going higher regardless.

Short-term pullbacks continue to look like they are being bought into, with the ¥188 level being a short-term support level, as we have seen the market take off from there. The fact that we are starting to show more aggressive momentum to the upside on short-term chart suggest that we have more distance to cover in this pair, and therefore I don’t have any interest in trying to short this market, but I do think that it’s only a matter of time before we try to reach that ¥192 level.

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The EURJPY pair was affected by some of the positive pressures, due to the continuation of forming extra support at 161.60, and stochastic rally towards the 80 level, to notice reaching the resistance at 162.90.

We couldn’t confirm regaining the bullish bias unless surpassing the resistance and providing positive closes above 163.25 level, therefore, we will keep preferring the negative attempts in the current period, which might target the support at 161.60, while achieving the conditions of regaining the bullish bias will ease the mission of recording several gains that might begin at 164.20 and 164.90.

The expected trading range for today is between 161.60 and 163.00

Trend forecast: Bearish

• GBP/USD retreats to the 1.3300 region following Thursday’s rebound.
• The technical outlook highlights a lack of buyer interest.
• Critical support level for the pair aligns at 1.3250.

GBP/USD stays on the back foot following Thursday’s rebound and trades slightly below 1.3300 in the European session on Friday. The renewed US Dollar (USD) strength makes it difficult for the pair to hold its ground as investors remain focused on latest developments surrounding the US-China trade relations.

US President Donald Trump said late Thursday that a meeting between Chinese and US officials took place earlier in the day. During the Asian trading hours, Bloomberg reported that China was considering suspending its 125% tariff on some US imports, including medical equipment and ethane, and officials were having discussions about waiving tariffs on plane leases.

Although China’s Foreign Ministry denied the news about US and China engaging in negotiations, investors remain optimistic about a further de-escalation of tensions. Hence, the USD Index stays in positive territory above 99.60 after losing 0.5% on Thursday.

The US economic calendar will feature the University of Michigan’s revision of the April Consumer Sentiment Index, which is unlikely to trigger a market reaction. In case market mood remains upbeat heading into the weekend, GBP/USD could have a hard time gaining traction. At the time of press, US stock index futures were up between 0.1% and 0.5% on the day, pointing to a bullish opening in Wall Street.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart moves sideways near 50, suggesting that the pair is struggling to gather directional momentum.

GBP/USD faces a critical support level at 1.3250, where the Fibonacci 23.6% retracement of the latest uptrend is located. If this support fails, additional losses toward 1.3200 (static level) and 1.3150 (Fibonacci 38.2% retracement) could be seen. On the upside, 1.3300 (static level, 20-period Simple Moving Average (SMA), 50-period SMA) aligns as first resistance ahead of 1.3340 (static level) and 1.3400-1.3410 (round level, static level).

• The USD/JPY price analysis indicates accelerating price pressures in Japan.

• Tokyo’s CPI increased by 3.4%, which is above forecasted to be a 3.2% increase.

• The dollar regained appeal as trade tensions between China and the US eased.

The USD/JPY price analysis indicates accelerating price pressures in Japan, which may prompt the Bank of Japan to raise rates. However, policymakers remain concerned about the economic impacts of Trump’s tariffs. Meanwhile, easing trade tensions between China and the US supported the dollar.

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The yen strengthened briefly on Friday after data revealed that inflation in Tokyo beat estimates. The CPI increased by 3.4%, above forecasts of a 3.2% increase. Moreover, it recorded a massive jump from the previous reading of 2.4%. Accelerating inflation aligns with the BoJ’s recent message of more rate hikes. However, Trump’s tariffs have created uncertainty about the timing of the timing of the next move. 

On the other hand, the dollar regained its appeal as trade tensions between China and the US eased. Both countries appear ready to lower tariffs and begin negotiations. The US has said it can lower tariffs on Chinese goods to 50%. Meanwhile, China is ready to exempt some US goods from tariffs. A deal to end the trade war would boost the dollar and ease economic worries. Meanwhile, the yen might lose its safe-haven appeal and drop.

USD/JPY key events today

Traders do not expect any high-impact economic releases from the US or Japan. Therefore, they will keep watching trade war developments.

USD/JPY technical price analysis: Channel breakout signals new trend

On the technical side, the USD/JPY price has broken out of its bearish channel. Immediately after the breakout, the price pulled back to retest the channel resistance and is now climbing higher. The channel breakout indicates a bullish shift in sentiment. The price now trades above the 30-SMA, and the RSI is above 50. Therefore, the bullish bias is strong. 

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Bears had a strong lead, maintaining a downtrend, with the price mostly below the 30-SMA. However, they could not go past the 140.01 support level. Consequently, bulls took over by pushing the price above the SMA and past the channel resistance. 

Given the strong bullish bias, USD/JPY could soon retest the 145.02 resistance level. A break above this level will confirm a new uptrend.

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