April 27, 2025 – Written by Frank Davies

STORY LINK Euro to Dollar Forecast: EUR Uptrend in Tact, 1.15 Resistance

Currency forecasters at MUFG expect the Euro to Dollar exchange rate (EUR/USD) to strengthen to 1.20 by the end of 2025 and extend gains over the following two years.

Credit Agricole is less convinced that the Euro can hold gains and forecasts a EUR/USD retreat to 1.12 by the end of 2025.

The underlying tone was consolidation during the week with EUR/USD little changed around 1.1370 after failing to sustain a surge to 3-year highs above 1.1550.

MUFG considers that the dollar will continue to correct the long-term over-valuation.

It considers that the tariff policies will damage the dollar; “Firstly, damage to some degree is already done. By announcing tariffs of such a scale, investors will remain cautious over what could come next. Secondly, we expected a cyclical slowdown to take place anyway in the US and Trump’s actions only reinforce that prospect and a policy reversal now won’t change that.”

The bank also considers that other global factors are in play including the EU fiscal boost and Japan’s move away from extreme monetary easing. It added; “There are key international factors that drove the dollar to overvalued levels and those factors should now help bring dollar valuation back down.”

ING commented on the short-term view; “As to the dollar more broadly, it could find a little support as trade tensions calm a little.”

As well as trade developments, US data over the next week will be watched very closely.

According to ING; “The next big chapter here will be whether all this volatility has hit real world decisions – especially in the US jobs market. There is plenty of US jobs data released next week and any deterioration here could trigger another round of dollar losses – albeit a more benign dollar decline on the view that the Federal Reserve would be riding to the rescue after all.”

Deutsche Bank added; “Investors have been reluctant to fully price in a recession because we don’t have enough evidence that one is likely. But if that changes and we start to see contractionary numbers (e.g. a negative payrolls print), that would lead to a fresh reassessment that could open the way for a fresh selloff.”

Firm data would at least postpone the day of reckoning for the currency.

Importantly, Danske considers that there has been important damage to the dollar.

The bank now has a radically different 12-month EUR/USD forecast of 1.22 from 1.00 two month ago.

According to the bank; “Longer term, we believe the evolving structural backdrop — including the seismic shift in US politics, the ongoing trade war, and signs of capital rotation out of US assets — will leave the USD facing the greatest relative downside.”

Danske added; “We estimate EUR/USD fair value over a 1–3-year horizon to be around 1.20. Key factors to watch include potential structural capital rotation out of US assets, the evolving global energy landscape, and euro area fiscal policy — all of which could influence EUR/USD valuation dynamics over time.”

In this context, the Ukraine situation will be watched closely and any ceasefire deal could underpin the Euro.

Credit Agricole expects the ECB will have to be even more dovish; “the ECB may view the sharp EUR NEER appreciation since the start of 2025 as adding to the downside risks to the Eurozone growth and inflation outlook.”

Further Euro gains would also create even more pressure for an ECB pivot.

The bank added; “In all, we continue to think that EUR/USD is looking overbought and overvalued at current levels and believe that the pair should remain sell on rallies in the very near term.”

UBS commented; “As the US announces new trade agreements, we anticipate confidence in the USD to be gradually restored. Accordingly, after the sharp EURUSD rally from 1.02 to 1.14, we think a period of consolidation is more likely than a continued surge.”

It added; “We expect EURUSD to trade in a 1.12–1.16 range in the coming months, with a bias toward the lower end as trade deals are signed.”

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TAGS: Currency Predictions Euro Dollar Forecasts

I wrote on 20^th April that the best trades for the week would be:

1. Long of the EUR/USD currency pair. Unfortunately, it fell by 0.24% over the week.
2. Short of the USD/JPY currency pair. Unfortunately, it rose by 1.00% over the week.
3. Long of Gold following a daily (New York) close above $3,343.10. This set up on Monday but unfortunately the price then fell by 3.06% over the rest of the week.

The overall result was a loss of 4.30%, which was 1.43% per asset.

Last week saw a much calmer market as we seem to have moved beyond any new tariff bombshells. Negotiations will be ongoing until the 90-day period ends in early July.

The major event of last week, which had a very light news agenda, was President Trump’s attempt at a gentle walk back of his comments blasting Jerome Powell of the Federal Reserve for not cutting rates more aggressively, which had led to a sharp fall in stock markets the previous week. Trump’s comments may have aided the recovery we saw in stock markets and in other risky assets last week.

Last week’s other major data points were:

1. Flash Services & Manufacturing PMI UA, Germany, UK, France – mostly worse than expected, suggested slowing economies.
2. Chair of Swiss National Bank Speech
3. Canada Retail Sales – as expected.
4. US Unemployment Claims – as expected.
5. UK Retail Sales – this was much better than expected, showing a 0.4% month-on-month increase, when a decline of 0.3% was anticipated.

The coming week has a busy schedule of important releases, including key US economic data and a policy meeting at the Bank of Japan.

This week’s important data points, in order of likely importance, are:

1. US Core PCE Price Index
2. US Average Hourly Earnings
3. US Non-Farm Employment Change
4. German Preliminary CPI
5. Australian CPI (inflation)
6. US Advance GDP
7. Bank of Japan Policy Rate, Monetary Policy Statement, and Outlook Report
8. Canadian GDP
9. Canadian Federal Election
10. Australian Parliamentary Election
11. US JOLTS Job Openings
12. US ISM Manufacturing PMI
13. US Employment Cost Index
14. US Unemployment Claims
15. US Unemployment Rate
16. Chinese Manufacturing PMI

For the month of April 2025, I made no monthly forecast, as at the start of that month, the Forex market was dull and there were only mixed long-term trends.

As there were no unusually large price movements in Forex currency crosses over the past week, I make no weekly forecast.

The Australian Dollar was the strongest major currencies last week, while the Swiss Franc was the weakest. Volatility decreased slightly last week, with more than 33% of the most important Forex currency pairs and crosses changing in value by more than 1%. Next week will likely see more volatility as there will be a very full data schedule.

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Last week, the US Dollar Index printed a bullish pin bar which closed not far from the high of its range. The price reached a new 4-year low before bouncing strongly off the support level shown in the price chart below, at 97.67. These are bullish signs, but the strong long-term bearish trend is a bearish sign, as is the fact that the price ended the week below the likely resistance level at 99.28.

It is hard to say what will happen to the US Dollar next week after this bullish bounce, but trading in line with the long-term trend will certainly look to be going short of the greenback. Much may depend on average hourly earnings and PCE Price Index data that will be released on Friday, and possibly also GDP data earlier in the week.

The EUR/USD currency pair rose last week to reach a new multi-year high near $1,1500, before reversing strongly to print a bearish pin bar, closing lower near the bottom of its weekly range. This is a bearish sign and suggests we may have seen a major bearish reversal. However, the long-term trend is still bullish, the price has just been trading in blue sky, and this currency pair tends to trend slowly but reliably.

So, it may still be worth being involved on the long side here, but I’d want to see a new significant bullish breakout first.

If the price can get established above $1.1517 that will probably be a good long trade entry signal, as there are no key resistance levels above that area for a few hundred pips.

The USD/JPY currency pair fell early in the week to make another new multi-month low just below the big round number at ¥140 before making a strong bullish bounce and closing the week notably higher. The long-term trend is certainly bearish, but we may well have seen a significant bullish reversal here, with the pair advancing in tandem with stock markets, which mostly saw recoveries over the past week as the US tariffs issue seems to have been largely defused by now, at least until the July deadline starts to get very close.

This major currency pair tends to trend with some reliability, so I like to be short here, but only after we see a strong bearish reversal leading to a new multi-month daily (New York) low close below ¥140.75.

Gold rose firmly last week to reach yet another new record high just a fraction below the round number at $3,500 before falling strongly enough to shake out most trend followers from their long positions by the end of the week. The weekly close ended up forming a candlestick which was more or less a bearish pin bar, although not a very well-formed one.

Gold can advance during periods of crisis like the one we are in now and this is what seems to have happened, and this may be why we are seeing quite a strong bearish reversal as risk appetite improves as the US tariffs issue seems to have been kicked away into touch until the summer arrives.

It is worth considering Gold as having standalone merit, as a look at the weekly price chart below shows a very strong long-term bullish trend having been underway for almost 1.5 years. Since the start of 2024, the price of Gold against the USD has increased by more than 55%, which is an impressive amount for any asset, and especially so for a precious metal.

I think it is wisest to be out of Gold right now unless we see a new high daily (New York) closing price above $3,425.

The S&P 500 Index advanced last week on improved risk sentiment. The bullish technical development is the weekly close above the pivotal point and round number at 5500.

Despite that bullish sign, it is worth noting that the price might still just be sitting below the end of the pivotal zone – one more higher close would probably be a more decisive bullish break.

On the bearish side, the price remains well below the 200-day moving average which is shown within the price chart below. The price is traded well within correction territory, having previously fallen into bear market territory.

Shorting US equity indices is very risky and probably not advisable to anyone except a very experienced trader. This is especially true as we are now seeing some signs of resilience which might see a continuing recovery until US tariffs come back into focus in June a few weeks from now.

I believe there is going to be more turbulence in the stock market over the coming months as we approach the 90-day tariff deadline in early July, so I am happy to be out of stocks for now.

The USD/MXN currency pair has been falling for several days, even as the USD started to recover very firmly over the past week. The price ended the week at a 6-month low closing price – both this and the recent price action are bearish. There is a strongly bearish trend here over both the long and short term, which will attract traders on the short side.

Another bearish technical development is the way the price has become well and comfortably established below the big round number at 20.00.

The fundamental driver behind the strong Mexican Peso is the way the trade war between the USA and Mexico has been defused, at least for the next few weeks. Absent any sign of worse US intentions, the price is likely to continue trending lower over the coming week.

I see the best trades this week as:

1. Long of the EUR/USD currency pair following a daily (New York) close above $1.1517.
2. Short of the USD/JPY currency pair (New York) close below ¥140.75.
3. Long of Gold following a daily (New York) close above $3,425.
4. Short of the USD/MXN currency pair.

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• The USD/JPY weekly forecast indicates improving risk appetite.

• The US said it was ready to lower tariffs on China to 50% and start negotiations.

• Market participants will focus on the Bank of Japan policy meeting.

The USD/JPY weekly forecast is bullish as improving risk appetite weighs on the safe-haven yen, pushing the pair higher.

Ups and downs of USD/JPY

The USD/JPY pair had a bullish week as the dollar rebounded and the yen lost its safe-haven appeal. The greenback recovered as calm returned to most US markets. Trump halted his earlier attacks on the Fed, restoring faith in the central bank’s independence. 

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At the same time, trade tensions between China and the US eased. The US said it was ready to lower tariffs on China to 50% and start negotiations. Meanwhile, China was prepared to exempt some US goods from tariffs. As a result, recession concerns eased, boosting the dollar. At the same time, risk appetite improved, hurting the safe-haven yen.

Next week’s key events for USD/JPY

Next week, the US will release crucial figures on economic growth, business activity, and employment. Moreover, market participants will focus on the Bank of Japan policy meeting.

Traders will focus on the US monthly employment report for signs of deterioration in the US economy. Experts believe Trump’s tariffs have hurt the US economy. Meanwhile, Fed policymakers are waiting for evidence of this. Therefore, a downbeat report will increase Fed rate cut expectations, pushing USD/JPY lower. 

Meanwhile, economists expect the Bank of Japan to keep interest rates unchanged on Thursday.

USD/JPY weekly technical forecast: Bulls approach the 30-SMA resistance

On the technical side, the USD/JPY price has rebounded after reaching the 140.01 support level. However, it still trades below the 22-SMA, indicating that bears remain in the lead. At the same time, the RSI is under 50, suggesting solid bearish momentum. 

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Bears have maintained the downward trajectory since they took charge near the 158.05 key level. The price has mostly traded below the 22-SMA and the RSI below 50. Moreover, USD/JPY has consistently made lower highs and lows. If this trend continues, the price will respect the SMA as resistance and bounce lower. 

Even if it punctures the SMA, it will not go beyond the bearish trendline. A break below the 140.01 support will strengthen the bearish bias and continue the downtrend. Meanwhile, the trend can only change if the price breaks above the SMA and the resistance trendline.

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GBP/USD Forecast: Pound Sterling struggles to attract buyers

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. Read more…

GBP/USD Forecast: Pound Sterling could push lower if 1.3250 support fails

GBP/USD extended its decline into a second consecutive day on Wednesday and registered its lowest daily close in a week near 1.3250. The pair holds its ground early Thursday and recovers toward 1.3300.

The disappointing Purchasing Managers Index (PMI) data from the UK, which showed a contraction in the private sector’s business activity in April, caused Pound Sterling to weaken against its rivals during the European trading hours on Wednesday. Later in the day, the US Dollar (USD) benefited from heightened optimism about easing tensions between China and the US, causing the pair to stretch lower. Read more…

Official White House Photo by Daniel Torok

• Deutsche Bank calls the start of the Dollar bear trend

• But, Pound will also fall against a dominant Euro

• Pantheon lowers GBP/EUR & raises GBP/USD forecast

“The dollar bear market is finally here,” say Tim Baker and George Saravelos, foreign exchange market strategists at Deutsche Bank.

The call marks a major shift in Deutsche Bank’s thinking about currencies as its analysts respond to meaningful shifts in global fundamentals under the second Trump presidency. They think the shifting tectonic plates pave the way to a stronger Euro and British Pound against the Dollar in the coming years, confirming the multi-year lows are in the rearview window.

These new forecasts can be viewed here.

“What has changed since the start of the year? The list of superlatives is long – the largest shift in US trade policy in a century; the biggest pivot in German fiscal policy since re-unification; the most significant reassessment of US geopolitical leadership since World War II, to name a few,” say the authors.

“Our view on all these factors is that the pre-conditions are now in place for the beginning of a major dollar downtrend,” they add.

Euro to Reign Supreme

Deutsche Bank expects EUR/USD to appreciate towards purchasing power parity over the remainder of the decade.

Purchasing power parity is a simple but fundamentally critical economic model that says the exchange rate must ultimately adjust to balance the cost discrepancies between the same good or service in two different economies. If the same good is more expensive in the U.S. than in the Eurozone, the theory says the U.S. consumer will substitute towards that European good. The process boosts the value of the Euro.

Flows have turned to favour Eurozone assets in 2025, with investors buying European stocks, which trade at lower values relative to those in America. The same can be said for bonds and other assets. Particularly given expectations that the Eurozone is to see a revival as Germany increases spending.

Pound-Euro Lower

For the Pound-to-Euro cross, what will matter is whether EUR/USD or GBP/USD appreciates the fastest.

Deutsche Bank’s targets show that EUR/USD will win the race, which means GBP/EUR must go lower. In fact, the forecasts show the exchange rate will favour the bottom of its multi-year range. 

“This speaks to the ability of the euro to benefit more than the pound from repatriation flows,” say the authors.

What are the exchange rate forecasts for this year and next? Given the major upheavals we are seeing, we have begun tracking point forecasts at the major investment banks on behalf of our partners, Horizon Currency. We have added Deutsche Bank’s new targets to this document, which can be requested here.

Above: GBP/EUR might be pointed lower multi-year.

Deutsche Bank says relative growth dynamics between the Eurozone and the U.S. are shifting in favour of the Euro, powered by Germany’s decision to increase spending in infrastructure and defence.

However, the analysts think the Euro could also be set to benefit from ‘safe haven’ flows driven by increased bond issuance in the Eurozone as well as increased demand from euros as a reserve currency at global central banks.

Pantheon Makes Near-term Forecast Adjustments

The decline in the Dollar marks the end of U.S. exceptionalism, which saw all U.S. assets rally on the basis that the economy was outperforming its global peers.

Donald Trump’s seemingly ad hoc and disruptive approach to government has upended exceptionalism, not least because of the massive import tariffs that will raise inflation and lower growth.

Stagflation is rarely a good outcome for currencies and U.S. exceptionalism gives way to “sell America” in 2025.

Above: GBP/USD multi-year lows might just be in.

Fears about the Fed’s future independence are just the latest market worry, exacerbating the ‘sell America’ trade: the British pound struck its highest level in seven months against the Dollar on Monday, amidst renewed fears for the independence of the U.S. Federal Reserve after President Donald Trump launched a fresh attack on Chair Jerome Powell.

“The US dollar index declined to its weakest level since 2022 after President Donald Trump’s criticism of Federal Reserve Chair Jerome Powell contributed to fears over the independence of the central bank,” says Mark Haefele, Global Wealth Management Chief Investment Officer at UBS AG.

Elsewhere, strategists at Pantheon Macroeconomics say they are trimming their Pound Sterling forecasts vs. the Euro but raising them against the Dollar.

“Our call for one extra 25bp cut to Bank Rate this year would ordinarily mean that we trim our GBP forecasts,” says Elliott Jordan-Doak at Pantheon Macroeconomics. “But we think risk premia have overtaken rate differentials as the driving force in the currency markets.”

Pantheon raises its year-end Pound-to-Dollar forecast to 1.30 from 1.27, and cuts its Pound-Euro forecast to 1.18 from 1.20.

April 25, 2025 – Written by Tim Boyer

STORY LINK Pound to Dollar FX Forecast: GBPUSD “Trend Remains Bullish”

The Pound to Dollar rate found support below 1.3300 on Friday and traded around 1.3320.

UK equities were able to make further gains, potentially advancing for the 10th successive session which would be the strongest run for over five years.

Scotiabank commented on GBP/USD; “the trend remains bullish, given the sequence of higher lows and higher highs. The RSI is softening but still in bullish territory. Near-term price action appears to have settled within a range roughly bound between support in the low 1.32s and resistance above 1.3400.”

According to Credit Agricole; “GBP is starting to look expensive vs the USD. An important question for FX investors is whether the upcoming UK data releases and global developments could trigger a reversal of recent market trends in the near term.”

US data releases will also be under close scrutiny in the near term given that markets want to see whether tariffs and uncertainty have triggered an impact in the real economy.

Scotiabank commented; “Hard data reports have held up relatively well—perhaps reflecting a burst of activity before tariffs really bite—but optimism on the US economic outlook has been replaced with growing recession concerns.”

Friday’s release reported that there was a small recovery in the April University of Michigan (UoM) consumer confidence index to 52.2 from the flash reading of 50.8, but still below the March reading of 57.0. The revision was due to gains in current conditions while expectations made only a marginal recovery.

UoM surveys of Consumers Director Joanne Hsu commented; “Consumer sentiment fell for the fourth straight month, plunging 8% from March. While the April decline in current conditions was modest, the expectations index plummeted with drop-offs in personal finances as well as business conditions. Expectations have fallen a precipitous 32% since January, the steepest three-month percentage decline seen since the 1990 recession.”

ING commented; “As to the dollar more broadly, it could find a little support as trade tensions calm a little. The next big chapter here will be whether all this volatility has hit real world decisions – especially in the US jobs market. There is plenty of US jobs data released next week and any deterioration here could trigger another round of dollar losses.”

Danske Bank maintains a negative dollar stance; “Longer term, structural challenges like US political shifts, the trade war, and capital rotation away from US assets suggest significant USD downside.”

UK retail sales volumes increased 0.4% for March after a revised 0.7% gain the previous month and compared with consensus forecasts of a 0.3% decline.

According to Scotiabank; “The release is unlikely to influence policymakers ahead of the May 8 BoE rate decision, given the well communicated bias to further accommodation. Markets are pricing in 27bpts of easing for the meeting.”

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TAGS: Pound Dollar Forecasts

April 25, 2025 – Written by David Woodsmith

STORY LINK Pound Sterling to Euro Forecast: Dollar Slide Could Enable Strong GBP Gains

The Pound to Euro exchange rate hit a 2-week peak just above the key level of 1.1730 on Friday before settling around 1.1725 with a firm underlying tone.

Equity markets again helped underpin the Pound Sterling on the day. The FTSE 100 has already risen for the last nine trading sessions as trade war tensions have cooled, the longest run since December 2019.

According to ING; “EUR/GBP breaking under 0.8520/25 could lead to a much deeper correction.” (Strong GBP/EUR gains if it can sustain a move above 1.1730.)

Credit Agricole added; “we note that our estimates of short-term fair value that are based on FX drivers like relative rate spreads and risk aversion suggest that the GBP is looking quite undervalued vs the EUR.”

It added; “An important question for FX investors is whether the upcoming UK data releases and global developments next week and the outcome of the BoE policy meeting on 8 May could trigger a reversal of recent market trends.”

Scotiabank, however, sees GBP/EUR at 1.1630 at the end of the second quarter.

MUFG expects a focus on inflation; “Given the labour market and the recent strength of the economy, along with a minimum wage increase, inflation risks remain much higher in the UK.”

If the Bank of England remains cautious over rate cuts and risk appetite is less hostile, the Pound could benefit.

UK data was mixed on Friday with stronger than expected retail sales data offset by a further dip in consumer confidence

Retail sales volumes increased 0.4% for March compared with consensus forecasts of a 0.3% decline, although the February increase was revised to 0.7% from the original reading of 1.0%.

Favourable weather boosted demand for clothing and outdoor sales which was offset partly by a decline in supermarket sales.

First-quarter sales increased 1.6% from the fourth quarter of 2024, the strongest increase since July 2021.

According to SocGen chief FX strategist Kit Juckes; “Sterling has got a little bit of comfort from this. I wouldn’t overstate it, but it had a decent run and was threatening to fall back and got a little bit of help from the data, temporarily at least.”

There were still doubts whether spending would be sustained.

The GfK consumer confidence index declined to -23 for April from -19 previously, slightly worse than expectations of -21 and the lowest reading since November 2023 with all components declining on the month.

Neil Bellamy, Consumer Insights Director at GfK, an NIQ Company, commented; “Consumers have not only been grappling with multiple April cost increases in the form of utilities, council tax, stamp duty, and road tax, but they are also hearing dire warnings of renewed high inflation on the back of the Trump Tariffs.”

He added; “Are we now on the verge of another round of rapidly increasing prices? If so, consumer confidence is likely to collapse and the broad gains seen since the disastrous September 2022 minibudget, when confidence hit a record low of -49, could quickly be eroded.”

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TAGS: Currency Predictions Pound Euro Forecasts

April 25, 2025 – Written by Tim Boyer

STORY LINK Pound to Dollar FX Forecast: GBPUSD “Trend Remains Bullish”

The Pound to Dollar rate found support below 1.3300 on Friday and traded around 1.3320.

UK equities were able to make further gains, potentially advancing for the 10th successive session which would be the strongest run for over five years.

Scotiabank commented on GBP/USD; “the trend remains bullish, given the sequence of higher lows and higher highs. The RSI is softening but still in bullish territory. Near-term price action appears to have settled within a range roughly bound between support in the low 1.32s and resistance above 1.3400.”

According to Credit Agricole; “GBP is starting to look expensive vs the USD. An important question for FX investors is whether the upcoming UK data releases and global developments could trigger a reversal of recent market trends in the near term.”

US data releases will also be under close scrutiny in the near term given that markets want to see whether tariffs and uncertainty have triggered an impact in the real economy.

Scotiabank commented; “Hard data reports have held up relatively well—perhaps reflecting a burst of activity before tariffs really bite—but optimism on the US economic outlook has been replaced with growing recession concerns.”

Friday’s release reported that there was a small recovery in the April University of Michigan (UoM) consumer confidence index to 52.2 from the flash reading of 50.8, but still below the March reading of 57.0. The revision was due to gains in current conditions while expectations made only a marginal recovery.

UoM surveys of Consumers Director Joanne Hsu commented; “Consumer sentiment fell for the fourth straight month, plunging 8% from March. While the April decline in current conditions was modest, the expectations index plummeted with drop-offs in personal finances as well as business conditions. Expectations have fallen a precipitous 32% since January, the steepest three-month percentage decline seen since the 1990 recession.”

ING commented; “As to the dollar more broadly, it could find a little support as trade tensions calm a little. The next big chapter here will be whether all this volatility has hit real world decisions – especially in the US jobs market. There is plenty of US jobs data released next week and any deterioration here could trigger another round of dollar losses.”

Danske Bank maintains a negative dollar stance; “Longer term, structural challenges like US political shifts, the trade war, and capital rotation away from US assets suggest significant USD downside.”

UK retail sales volumes increased 0.4% for March after a revised 0.7% gain the previous month and compared with consensus forecasts of a 0.3% decline.

According to Scotiabank; “The release is unlikely to influence policymakers ahead of the May 8 BoE rate decision, given the well communicated bias to further accommodation. Markets are pricing in 27bpts of easing for the meeting.”

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TAGS: Pound Dollar Forecasts

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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