Created on March 25, 2025

• The euro initially rallied against the US dollar but has given back quite a bit of the gains during the session as it looks like we continue to see a lot of noise overall.
• Ultimately, I think this is a market that you have to be very cautious with because I do think that it is going to be very noisy.
• However, if we do break down below the 1.0775 level, then I think we have a deeper correction.

This could be a sign that the US dollar is going to strengthen against multiple things. And in that environment, the euro is normally one of the first things to get hammered. I think also you have to look at the possibility that perhaps the market will turn around and stays in this consolidation range that we have been in for a while.

This consolidation ranges between the 1.08 level and the 1.0950 level has been important for a couple of weeks. And now we, after seeing such a massive shot higher, have to determine whether or not we will consolidate or if we will have to pull back in order to find value. After all, the interest rate differential between Europe and the United States continues to change. And with that starting to favor Europe, or at least moving in that direction, that makes the euro a little bit more palatable.

Germany Leads the Way

It’s also worth noting that Germany is leaving a recession. That’s huge too. But gravity eventually influences things. And I think that’s part of what we’re seeing here. Any pullback at this point in time, I don’t necessarily think changes the trend. I just think it gives us a little bit of a breather for buyers to come back in and pick up cheap euros.

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Created on March 25, 2025

• The British Pound has shown itself to be rather strong during the trading session against multiple currencies, but it’s especially true against the Japanese Yen.
• The British Pound is trying to get to the 195 Yen level, a large round psychologically significant figure, and an area that’s been important multiple times.

If we can break above the 195 yen level, then it’s likely that we will go looking to the 198 yen level. Short-term pullbacks, I think, continue to be something that you need to watch closely due to the fact that the 200-day EMA is right at the bottom of the candlestick for the session.

Underneath there, we also have the 50-day EMA, and I think that is something worth paying attention to as well. Ultimately, this is a market that will continue to be volatile. And I do think that the interest rate differential continues to favor the British pound in perpetuity.

Buyers Are Out There

So, I do think that there will be buyers regardless. I have no interest in shorting this GBP/JPY pair unless there is some type of “massive risk off” move around the world. I just don’t see that right now. So ultimately, I think you have to understand that this is a scenario where you’re looking at each dip as a potential buying opportunity as it offers value. If we can clear that 195 yen level on a daily close, then I think you will see a lot of people rushing into the market to take advantage of cheap pounds. Ultimately, this is a carry trader’s dream. And if we can get above the 195 yen level, then you will see more money flowing into this market, taking advantage of a potential move to 198 yen, possibly even the 200 yen level.

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Created on March 24, 2025

• The British pound has fallen pretty significantly against the US dollar on Friday, as we are now testing the 1.29 level.
• I think at this point in time, if we break down below 1.2850, then we could see a little bit deeper correction.
• This does make a certain amount of sense because the dollar had been sold off so viciously that it was either going to zero or we were going to see a little bit of stability reenter the market.

The size of that candlestick is ugly, but it is worth noting that the euro has had three negative days in a row, whereas the British pound has only had two. It’s worth noting that the 50-day EMA is turning around to break above the 200-day EMA, kicking off the so-called Golden Cross. So longer term, people will be looking at this through the prism of perhaps buying and holding. But I think this is a scenario that you need to watch a little closer, because quite frankly, we just had the Monetary Policy Committee release its voting record, and there was only one of them calling for a rate cut instead of the expected two.

MPC Slightly More Hawkish

That was a little bit more hawkish than anticipated, and we have fallen since then. Whether or not we actually truly break down below the support at 1.2850 remains to be seen. But as goes the euro, will this pair go as well? From what I see, this is a dollar-wide move across the forex markets. There’s also the possibility that we turn around and bounce.

And if we do, then we’re in a situation where I think we’re just working off some of this froth. It’s clear to me that the 1.30 level is an area that is going to continue to be difficult to break above, but if and when we do, that would be a very positive sign. It would probably mean that the British pound goes looking to the 1.35 level. Regardless, a breakdown from here probably would challenge the 1.2750 level, which at that point in time would probably be right around the same place the moving averages are.

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Created on March 24, 2025

• For three consecutive trading sessions, the EUR/USD currency pair has been experiencing selloffs with losses down to the 1.0796 support level, abandoning the upward rebound gains of the past week.
• This reached the 1.0955 resistance level, the highest for the pair in five months.
• Meanwhile, the EUR/USD pair will start the new week’s trading stable around the 1.0812 level.
• Therefore, the Euro’s gains have evaporated following the announcement of fiscal stimulus for the largest economy in the Eurozone.

Euro Performance Seeks Stimulus

According to Forex currency market trading, the Euro price has fluctuated against most major currencies, declining against many of them, but remaining calm elsewhere, despite cautious trading conditions. Regardless of the Euro’s safe-haven status and some positive comments from ECB President Christine Lagarde, the single currency has struggled to attract new buy orders. This is primarily due to the rise in the US dollar (USD), which has limited the Euro’s gains due to its negative correlation.

Will Tariffs Support the US Dollar’s Strength?

According to Citibank’s currency market analysis team, the US dollar will benefit from a series of tariff measures scheduled to be announced on April 2. The announcement of reciprocal tariffs will be the largest during Donald Trump’s second term, with analysts expecting significant ramifications for global financial markets. Accordingly, the analysts stated, “We maintain our expectations for a US dollar rebound in the second quarter. The risks of tariffs appear understated, and we expect a correction in the US dollar’s depreciation with a hawkish announcement on April 2.”

This indicates that Citibank sees tariffs as positive for the US dollar, representing a deviation from recent price action that suggests otherwise. The implementation of tariffs in early March on Canadian and Mexican imports, as well as global steel and aluminium imports, led to weakness in US stock markets and the US dollar.

Decisively, the weakness of the US dollar has upended the assumption that tariffs support the dollar.

However, Citigroup believes the original plan remains valid, and that tariffs will support the US dollar.

Trading Tips:

Keep in mind, as we have often advised before, that the EUR/USD gains are prone to evaporate quickly, which has happened recently, and this strategy still stands. Obviously, this week’s trading may be quiet most of the time.

US Stocks Under Pressure from Trump’s Policies

According to recent trading and across stock trading platforms, US stock indices have been in steady decline for weeks due to uncertainty about the direction of the US economy. The trade war between the United States and its major trading partners threatens to exacerbate inflation and harm consumers and businesses alike. At the same time, US inflation remains consistently above the Federal Reserve’s 2% target, and tariffs could hinder the US central bank’s efforts to reduce inflation.

On the US tariff front, US President Donald Trump has set an April 2 deadline to impose further tariffs on trading partners. This comes on the heels of a series of other tariff deadlines that have been postponed, sometimes at the last minute.

Accordingly, companies have warned investors about tariffs, inflation, and growing uncertainty about their impact on costs.

On the monetary policy front, the Federal Reserve held interest rates steady at its final meeting last week as it assessed the potential impact of tariffs and other shifts in US policy. The Fed had cut interest rates until the end of last year amid persistently low inflation, but has maintained them until 2025. Lower interest rates can support the economy, but they could also push inflation higher.

For his part, Fed Chairman Jerome Powell acknowledged that the US economy remains strong but stressed that uncertainty makes forecasting difficult.

EUR/USD Technical Analysis Today:

Dear reader, according to the daily chart performance, if the bears succeed in moving the EUR/USD price below the 1.0800 psychological support level, the chances of a strong downward move towards lower levels will increase. The closest levels thereafter are 1.0760, 1.0690, and 1.0600, respectively. From the last level, the technical indicators will move towards strong oversold levels, led by the RSI and MACD. Conversely, and on the same time frame, the 1.1000 psychological resistance will remain the most important to confirm the upward reversal of the EUR/USD trend.

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