The GBPJPY pair provided several negative closes in its recent trading below the critical resistance at 190.10, to interact with the negativity of the main indicators by attacking 38.2% Fibonacci correction level at 188.00.

Stochastic begin providing negative momentum will increase the chances for confirming breaking 188.00 level, which allows it to form strong bearish waves, to expect reaching 186.50, then attempt to press on the barrier near 186.10, in order to find an exit to resume the negative attack in the upcoming period trading.

The expected trading range for today is between 186.50 and 188.70

Trend forecast: Bearish

April 22, 2025 – Written by Frank Davies

STORY LINK Pound to Dollar Forecast: GBP, EUR Surge as USD Crashes on Trump-FED Spat

The Pound Sterling has surged to a seven-month best exchange rate level as confidence in the US Dollar has deteriorated further during the Easter weekend.

As well as fears over the economy, Trump’s criticism of Fed Chair Powell has reinforced fears that central bank independence could be compromised and the dollar posted sharp losses to fresh 3-year lows.

In this environment, the Pound to Dollar exchange rate (GBP/USD) jumped to 7-month highs above 1.3400.

EUR/USD also jumped to 41-month highs above the 1.1550 level while gold hit another record high and US equity futures lost ground.

MUFG commented; “While we think it is unlikely the Trump administration will be able to remove the Fed Chair outright given the lack of legal authority, any moves on this front will likely create an outsized market move including in FX and is something to watch closely for moving forward.”

According to Stephen Innes at SPI Asset Management; “One thing that’s absolutely clear — and no longer debatable — is that the reputational hit to the US brand is real, and it’s not fading quietly into the next news cycle.”

He added; “It’s sticking. Investors, allies, and even central banks are starting to bake in the idea that American policymaking, both fiscal and monetary, is now a geopolitical variable — not a given.”

On Friday Trump again attacked Fed Chair Powell and stated that Powell’s termination can’t come quickly enough.

The comments have inevitably stoked criticism on multiple fronts.

Chicago Fed Goolsbee commented on Sunday; “There’s virtual unanimity among economists that monetary independence from political interference — that the Fed or any central bank be able to do the job that it needs to do — is really important.”

According to Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho; “Powell does not report directly to Trump, so (Trump) cannot actually fire him. He can only be removed from office under certain procedures, which one would think have a higher barrier.

He added; “but can the president move the cogs and wheels to undermine the perceived independence of the Fed? Sure, he could.”

Even if Powell is safe in the job, talk of undermining Fed independence is crucial in damaging confidence.

Varathan added; “I would argue that they don’t even need to sack Powell immediately. You just need to create the perception that you could fundamentally change the view of an independent Fed.”

Trade fears have also undermined the dollar amid evidence that China is not backing down and is attempting to recruit countries to its cause.

On Monday, there was tough rhetoric from Beijing.

According to a statement from the Commerce Ministry; “Appeasement will not bring peace, and compromise will not be respected. To seek one’s own temporary selfish interests at the expense of others’ interests is to seek the skin of a tiger.”

It added; “That approach will ultimately fail on both ends and harm others”.

Trump has again complained vigorously about non-tariff barriers including VAT. This focus on areas such as domestic taxation will make it even more difficult to secure trade deals.

According to French Finance Minister Eric Lombard; “Donald Trump has hurt the credibility of the dollar with his aggressive moves on tariffs — for a long time.”

He added; “If Powell is pushed out this credibility will be harmed even more, with developments in the bond market.”

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If we break down below there, some traders will look at this as some type of head and shoulders pattern and it could lead for a drop down to 120. If that ends up being the case, I suspect we have some type of financial crisis. So, watch that very closely.

AUD/USD Technical Analysis

The Australian dollar has broken higher against the US dollar, and it is now peaking above the 0.64 level, an area that has been like a brick wall over the last several months. We are just above the 200 day EMA as I record this, so we’ll have to see if we can stay above here because if we can, that’s not a good look for the dollar. Now, having said that, could the Australian dollar rally pretty significantly?

Well, the answer, I guess, would be yes, because the next massive resistance level would be somewhere around 0.68, where it had spent a couple of years. So, despite the fact that this has been such a brutal move to the upside, the reality is that through the prism of a longer-term chart, we would just be heading to an area of somewhat normalcy as far as trading is concerned.

For a look at all of today’s economic events, check out our economic calendar.

Created on April 21, 2025

• For two consecutive weeks, the GBP/USD currency pair has been trading within an upward channel, culminating in a move towards the $1.3298 resistance level at the end of last week’s trading.
• This was the highest level for the pair in six months, and it closed the week near its highs.
• This raises questions among currency traders about the upward targets for the GBP/USD pair in the coming days.

According to reliable trading platforms, the British Pound is experiencing a sharp rise, having gained 4.5 percent against the US Dollar over the past nine trading days. It faces strong resistance at $1.3430.

Will Sterling’s Gains Increase in the Coming Days?

According to forex market trading. The British pound has achieved a remarkable rise this year, 2025, rising by about 10% since mid-January. Obviously, Sterling’s gains are due to a combination of strong UK economic data and significant US dollar fatigue due to weak sentiment toward the US currency due to Trump’s tariffs and their impact on the US economy and growth prospects.

Also, traders are increasingly betting that the Bank of England may cut interest rates on May 8 to allow the British economy more time to recover. Generally, British inflation is easing, and recession fears are fading. This gives the pound more room to achieve stronger gains unless it is subject to profit-taking and currency traders take new long positions.

Trading Tips:

Closely monitor the factors positively influencing global financial markets and investor sentiment to anticipate the British Pound’s future gains. Remember that it is a risk currency.

Economic Data Affecting GBP/USD:

According to the upcoming economic calendar data, the US Dollar’s performance will be strongly influenced by the Q1 earnings season figures, starting with Tesla’s highly anticipated report on Tuesday. This will be followed by other key earnings updates from tech giant Alphabet, along with Procter & Gamble, PepsiCo, Intel, Boeing, Merck, Philip Morris International, IBM, AT&T, Verizon, T-Mobile, Comcast, Intuitive Surgical, ServiceNow, Thermo Fisher Scientific, AbbVie, Gilead Sciences, CME Group, Newmont, and Visa. In addition to earnings, investors will be watching speeches from Federal Reserve officials Philip Jefferson, Adriana Kugler, Christopher Waller, Patrick Harker, and Austan Goolsbee. Markets will also monitor potential developments in US tariff policy, including the possible response to Asian protectionism and President Trump’s signals regarding trade deals.

On the economic data front, the US economic calendar will be relatively light. US durable goods orders for March are expected to grow sharply for the third consecutive month, while existing home sales are expected to contract.

GBP trading will be influenced by the release of preliminary Purchasing Managers’ Index (PMI) data for April, which provides an early reading of how business activity and sentiment are responding to recent trade developments. Manufacturing activity is expected to remain contracting in the UK. A slowdown is expected in the services sector. Along with the PMIs, UK retail sales data will be closely watched. After two months of gains, sales are expected to have declined in March.

Technical Analysis for the GBP/USD pair today:

The overall trend for the GBP/USD pair remains strongly bullish, and breaking the current $1.3300 resistance will push the bulls towards the next significant resistance at $1.3430, the highest level for the pair since last September. The subsequent upward breakout will be the $1.3600 level. From now until further upward movement, technical indicators confirm their break into overbought territory, as indicated by the RSI, MACD, and Stochastic.

Conversely, over the same timeframe, the initial breakout of the general uptrend requires bears to move towards the 1.3130 support level first. Stabilizing below this level provides an opportunity for bears to move towards the psychological support level of 1.3000, which confirms the downward trend reversal. I still prefer to buy GBP/USD from every downward level, and the closest trading recommendation for GBP/USD is to buy from the 1.3180 support level, with a target of 1.3375 and a stop loss of 1.3100. A sell recommendation for GBP/USD may include the 1.3385 resistance level, with a target of 1.3220 and a stop loss of 1.3470.

The GBP/USD pair is not awaiting significant and influential economic data from either Britain or the United States. Therefore, influential sentiment will be the key factor to consider, as holidays reduce liquidity and traders’ risk appetite.

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Created on April 21, 2025

• Amid strong risk aversion among investors and a flight to the Japanese Yen as a safe haven, selling pressures on the USD/JPY pair have intensified, with losses reaching the $141.60 support level, the lowest for the currency pair in seven months.
• The pair began the new trading week around these losses after failing to rebound upwards last week.

Yen Gains Await Bank of Japan Announcement

According to Forex currency trading experts, the Japanese Yen may stabilize around its strongest gains against other major currencies as investors react to the latest inflation data. Official figures showed that Japan’s headline inflation fell to a four-month low of 3.6% in March, while core inflation rose in line with expectations to 3.2%. Market focus now shifts to the Bank of Japan’s monetary policy meeting this week, where the central bank is widely expected to keep Japanese interest rates unchanged at 0.5%.

However, policymakers may revise their growth forecasts downwards amid increasing concerns about the impact of US tariffs on Japan’s export-dependent economy. While the Bank of Japan is expected to maintain a gradual tightening path this year, driven by persistently high food prices and rising wages, the external trade environment continues to cast a shadow of doubt on its monetary stance. Consider that rising inflation comes at a time when Japan is engaged in difficult trade negotiations with the United States and faces new, stringent tariffs. Steel and aluminum exports are already subject to 25% tariffs, and a decision to impose a 25% tariff on car exports took effect earlier this month.

Trading Tips:

The sharp downward movement of the USD/JPY pair will increase the idea of seizing buying opportunities. Monitor the influencing factors on the currency pair to choose the best trading opportunities.

Is Japan Manipulating Currency Exchange Rates?

In this regard, Japanese Finance Minister Katsunobu Kato told parliament last Friday that Japan is not taking any steps to deliberately weaken the Japanese Yen, rejecting US President Donald Trump’s claims that Tokyo is intentionally devaluing its currency to support exporters. His remarks come ahead of a potential meeting with US Treasury Secretary Scott Bisant in Washington this week during the G20 finance ministers and central bank governors meeting and the International Monetary Fund (IMF) Spring Meetings. If this meeting takes place, it will serve as the main forum for Japan and the United States to address currency issues amid broader negotiations on tariffs that began earlier this week. The Japanese minister pointed out that Japan’s latest intervention in the Forex market involved buying the Yen, not selling it, reflecting Tokyo’s commitment to fair market operations.

While the Japanese minister acknowledged the US’s keenness to raise the issue of exchange rates, he declined to speculate on potential talking points, noting that no date has yet been set for the meeting with Bisant.

USD/JPY Technical analysis and Expectations Today:

According to the performance on the daily chart above, the overall trend for the USD/JPY currency pair remains bearish. Breaking below the $141.60 support level will quickly move the bears towards the psychological support level of $140.00. From now until reaching this psychological level, keep in mind that technical indicators have moved towards strong oversold levels, as observed in the direction of the Relative Strength Index (RSI), MACD, and Stochastic.

Therefore, we still prefer the strategy of buying USD/JPY at every downward level. The most suitable buying recommendation currently is at $140.90 with a target of $144.80 and a stop-loss at $140.00. Currently, the currency pair is not awaiting significant influential economic data today. Therefore, the movement will depend on investors’ risk appetite and expectations for the future policies of global central banks.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

• The EUR/USD outlook indicates further dollar weakness.

• Reports revealed that the US president plans to fire Fed Chair Jerome Powell.

• The European Central Bank cut rates last week, leaving room for more.

The EUR/USD outlook indicates further dollar weakness after Trump’s threats to fire Fed Chair Powell. Market participants are dumping the greenback and US assets, allowing the euro to climb. Meanwhile, the ECB indicated weaker growth in the Eurozone due to Trump’s tariffs. As a result, traders are pricing more rate cuts in the coming months. 

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On Friday, reports revealed that the US president plans to fire Fed Chair Jerome Powell. Since Trump took office, he has advised the Fed to continue cutting interest rates. However, Powell has remained cautious, waiting to see the impact of recent tariffs on the economy. The Fed Chair has repeatedly said there is no hurry to lower borrowing costs. 

The reports caused more turmoil in markets recovering from wild tariff moves. Moreover, investors lost confidence in the US economy, plunging the dollar. 

Meanwhile, although the euro rallied, the European Central Bank cut rates last week and left room for more. ECB president Christine Lagarde noted that Trump’s tariffs would hurt growth. However, she failed to give clear guidance about the next meeting. Still, market participants expect another rate cut in June. Meanwhile, policymakers may wait to see if Trump’s 20% tariff on the Eurozone takes effect. 

EUR/USD key events today

Traders are not anticipating any key economic releases today. Therefore, they will continue to digest US policy developments.

EUR/USD technical outlook: Uptrend breaks past 1.1502 for a new high

On the technical side, the EUR/USD price has rallied and broken above the 1.1502 resistance level. The move has reached a new high, further strengthening the bullish bias. The price now trades well above the 30-SMA, with the RSI in the overbought region. This shows a strong uptrend.

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Bulls took charge when the price crossed above the 30-SMA. They have maintained the price above the SMA, respecting it as a solid support. At the same time, the price has consistently made higher highs and lows, indicating a developed bullish trend. 

However, bulls might pause at the 1.1602 resistance to allow the price to retest the SMA. Still, the bullish bias will remain intact as long as the price trades above the SMA and the RSI above 50. 

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• GBP/JPY softens to around 188.45 in Monday’s early European session, losing 0.35% on the day. 
• The cross keeps the negative outlook below the 100-day EMA with a bearish RSI indicator. 
• The initial support emerges at 187.47; the first upside barrier is located at 190.00.

The GBP/JPY cross weakens to near 188.45 during the early European session on Monday. The ongoing uncertainty over US President Donald Trump’s trade tariffs continues to weigh on investors’ sentiment, which boosts safe-haven currencies like the Japanese Yen (JPY). 

According to the daily chart, the bearish outlook of GBP/JPY remains in play as the cross remains capped below the key 100-day Exponential Moving Average (EMA). The path of least resistance is to the downside, with the 14-day Relative Strength Index standing below the midline near 43.60. 

The first downside target for the cross emerges at 187.47, the low of April 17. Extended losses could see a drop to 186.54, the low of April 8. The crucial support level for GBP/JPY is seen in the 185.00-184.95 zone, representing the psychological level and the lower limit of the Bollinger Band.

In the bullish case, the immediate resistance level is located at the 190.00 round mark. Sustained trading above this level could attract some buyers to 191.90, the 100-day EMA. Further north, the next hurdle to watch is 194.20, the high of April 3. 

GBP/JPY daily chart

I wrote on 6^th April that the best trades for the week would be:

1. Long of Gold following a daily close above $3,134.31. This set up on the Thursday and ended the week up 1.96% from there.
2. Following these expected movements in the Forex market:
   1. GBP/JPY is likely to rise = +0.43%
   2. AUD/JPY is likely to rise = +2.75%
   3. GBP/CHF is likely to rise = -3.16%
   4. NZD/JPY is likely to rise = +2.98%
   5. EUR/NZD is likely to fall = +0.18%
   6. EUR/AUD is likely to fall = +0.47%
   7. GBP/AUD is likely to fall = +2.48%
   8. AUD/CAD is likely to rise = +2.49%
   9. NZD/CAD is likely to rise = +1.57%
   10. NZD/CHF is likely to rise = +0.55%

The overall result was a win of 10.74%, which was 1.07% per asset.

Last week saw a much calmer market as days and even weeks are now passing without any new tariff bombshells, although President Trump hinted that new automobile tariffs at 25% due to begin in early May might be postponed. Negotiations will be ongoing until the 90-day period ends in early July.

The big news last week was the European Central Bank’s rate cut of 0.25%, which was widely expected, and the optimism that inflation is now well on course to settle long-term at about the target level of 2%. The ECB seems to feel quite confident that it has inflation beaten, and ironically this may be boosting the Euro as a new safe-haven currency.

Another major item was lower than expected inflation in both the UK and in Canada, which is adding to the growing “inflation beaten” narrative.

The Bank of Canada held its Overnight Rate at 2.75%.

US Retail Sales data came in a little stronger than expected.

Finally, President Trump has been publicly criticizing Fed Chair Jerome Powell for not cutting rates more quickly, and is publicly musing on studying replacing him, although it is hard to see how this could be executed. President Trump is trying to talk down the Federal Funds Rate.

The coming week has a very light schedule of important releases.

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

1. Flash Services & Manufacturing PMI UA, Germany, UK, France
2. Chair of Swiss National Bank Speech
3. Canada Retail Sales
4. US Unemployment Claims
5. UK Retail Sales

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 made no weekly forecast.

The British Pound and the New Zealand Dollar were the strongest major currencies last week, while the Swiss Franc, the US Dollar, and the Euro were the weakest. Volatility decreased markedly last week, with more than 37% of the most important Forex currency pairs and crosses changing in value by more than 1%. Next week will likely see even lower volatility as there is such a light data schedule

You can trade these forecasts in a real or demo Forex brokerage account.

Last week, the US Dollar Index printed a bearish inside bar pattern which closed near the low of its range. The previous week’s low is close by and represents a 3-year low price. These are all bearish signs and we clearly have a strongly bearish long-term trend in the greenback.

It looks likely that US Dollar weakness will continue as there are no real technical or fundamental reasons why this will reverse, and ongoing tariff concerns are likely to keep the Dollar weak. However, it might be that as we approach the tariff negotiation deadline in early July that we start to hear news of trade deals which might boost the Dollar.

The EUR/USD currency pair rose last week to make its highest weekly close in a few years, ending the week not far from the high of its range. However, it is worth noting that the resistance level at $1.1430 has continued to hold, and that the price was unable to make a new high last week.

It is likely worth being long here as this currency pair tends to trend slowly but reliably. With a weak greenback and interest in the Euro as a safe-haven currency, there are good reasons to be long here.

If the price can get established above $1.1430 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 GBP/USD currency pair rose last week to close very near its high on an unusually large range, well above the previous week’s high. The Pound is the strongest major currency and managed to advance further against the greenback than the Euro did last week, but the price chart below shows the long-term bullish trend is weaker and choppier. However, the short-term bullish momentum is certainly here.

It is likely worth entering long trades here on a short-term basis on bullish breakouts for as long as this short-term momentum persists.

The Pound’s strength is maintained mostly on the back of its relatively large interest rate of 4.50%, which is attracting deposits looking for overnight carry.

Bulls might beware of the area above $1.3380 if it is reached this week.

The USD/JPY currency pair traded lower for yet another consecutive week, reaching a new 6-month low and closing near the bottom of its weekly range.

There is clearly a long-term bearish trend here, and there has also been short-term bearish momentum due mostly to weakness in the US Dollar.

This major currency pair tends to trend with some reliability, so I like to be short here. We might also start to see the Yen really start to strengthen more itself as Japanese wages continue to rise and make rate hikes more of a possibility at the Bank of Japan.

While other currencies are advancing more strongly against the Dollar, few are breaking to new long-term highs, and that is a good reason to be short here.

Gold rose firmly last week to reach yet another new record high not far below the round number at $3,400. The weekly close was a little way off the high, but the bearish retracement here has not been especially deep, so everything still looks essentially bullish as the precious metal advances into blue sky.

Gold can advance during periods of crisis like the one we are in now and this is what seems to be happening as its correlation with the US stock market lessens.

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 wise to be long of Gold right now, or to enter a new position once we get a new high daily closing price in New York above $3,343.10.

The S&P 500 Index lost a little ground last week. The big story is the price managing to reclaim some ground after the big selloff a few weeks ago, but bulls ran into the 5,500 area which has acted as strong resistance, and we’ve seen the price fail here and start to turn bearish again.

The price traded in bear market territory (down 20% from the recent peak), and has regained ground, but is still well below the 200-day moving average which is shown in green within the price chart below.

These are all bearish signs, although shorting US equity indices is very risky and probably not advisable to anyone except a very experienced trader.

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.

I see the best trades this week as:

1. Long of the EUR/USD currency pair.
2. Short of the USD/JPY currency pair.
3. Long of Gold following a daily (New York) close above $3,343.10.

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April 20, 2025 – Written by Frank Davies

STORY LINK Pound to Dollar Forecast: GBPUSD Bullish to 1.34 for Buyers

After an initial retreat, Commerzbank expects the Pound to Dollar exchange rate (GBP/USD) gains to 1.39 by Q2 2026 as the dollar loses traction.

ING sees scope for near-term GBP/USD gains, but expects slight losses to 1.30 on a 12-month view as European currencies fail to hold gains.

US equities struggled during the week, but there was a net easing of volatility and overall risks premiums edged lower which helped cushion risk appetite.

With a more benign environment and a fragile dollar, GBP/USD strengthened to 6-month highs just below 1.3300 before stabilising.

Even with more benign conditions, uncertainty remains extremely high.

SocGen commented; “Both trade uncertainty and FX volatility peaked on 9 April, coinciding with heightened tensions in global trade dynamics. This moment could mark a critical juncture in the trade war, potentially signalling either a pause or the peak of the trade risk premium.”

US retail sales data held firm for March, but there were significant earning signs in the latest business confidence readings with expectations of weaker activity and higher inflation.

High-frequency economic indicators will continue to scrutinised very closely.

SocGen commented; “The current de-coupling between rates and FX makes sense in the context of huge foreign exposure to US asset at a time of turbulence but the key question is still the US economy is going to slow as much and as fast as the market thinks.”

If the economy holds firm, the dollar could gain renewed support, but evidence of a slide in activity would be damaging.

UBS commented; “Looking ahead, Wednesday’s release of the first global purchasing managers’ index (PMI) data since recent tariff announcements will be pivotal. A relatively weaker US PMI versus the rest of the world could reignite the USD downtrend.”

Fed Chair Powell reiterated that he was in no rush to adjust interest rates, while stating that the tariff impact is likely to be larger than expected with weaker activity and higher inflation.

MUFG commented; “That to us does not sound like a central bank that will be rushing to cut rates and there remains an increasing risk that the Fed could delay for longer than the markets expect to cut rates.”

President Trump maintained calls for lower interest rates and criticised Powell very strongly and effectively called for him to resign.

The Administration’s currency policy will also be a key element.

According to Commerzbank; “In the coming months, the dollar should recover somewhat, as markets are pricing in Fed rate cuts too early.”

It expects GBP/USD will dip bank below 1.30 this quarter.

It added; “But if it becomes clear later in the year that Donald Trump does not want the appreciation of the dollar to partially offset the effects of his tariff increases, he is likely to publicly put the Fed under pressure. In this environment, investors are likely to increasingly doubt that the Fed will act decisively, which would weigh on the dollar.”

Danske Bank commented; “Tariff shocks, stagflation fears, consumer and business uncertainty and tightening financial conditions all challenge the long-standing narrative for US exceptionalism.”

It added; “The usual macro drivers are no longer behaving as expected, reinforcing our view that the USD is losing its traditional anchors.”

According to Scotiabank; “A weaker USD seems to be a likely outcome of US trade policy—either indirectly in the longer run as the US capital account surplus runs down alongside the reduction in the US trade deficit or more directly as the US seeks a more competitive currency arrangement against its major trading partners.”

The dollar will be much more vulnerable if there is a wider loss of confidence.

Scotiabank added; “There may be early signs of shift in perception as to the reserve currency status of the U.S. dollar and an associated decline in the perceived safety of American government debt.”

ING added; “We do think FX reserve managers will be cutting the dollar shares in their FX reserves this year. As one of the big five reserve currencies, sterling does benefit from the dollar diversification trade.

It added; “GBP/USD is also very much driven by EUR/USD trends – where fiscal stimulus will be helping in Europe too.”

Following the latest UK labour-market and inflation data, markets remained convinced that there will be a Bank of England rate cut in May.

The UK data will also be monitored very closely given the fiscal and monetary policy implications.

ING commented; “Domestically, we’re waiting on the UK data to show whether unemployment is rising or inflation is falling. We think the market is right to forecast three more Bank of England cuts this year, starting in May.”

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April 20, 2025 – Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: Further EUR Upside to Upper 1.16s?

Currency forecasters at Deutsche Bank expect long-term Euro to Dollar exchange rate (EUR/USD) gains to 1.25 at the end of 2027 and note the risk that gains could come quicker.

EURUSD was held below 3-year highs of 1.1470 during the week, but found strong buying below 1.1300.

EUR/USD remains well above levels that would be justified on rate differentials alone amid a loss of dollar confidence.

MUFG commented; “If those rate spreads were to reassert themselves in influencing FX, then the dollar would likely recover. It would imply EUR/USD breaking back below the 1.1000-level.”

It added; “However, we doubt that is going to happen at this juncture and it would take something more meaningful from President Trump in terms of backtracking on trade policy for the dollar to recover on a more sustained basis.”

Standard Chartered sees scope for a retreat to 1.08 this quarter; “We are of the view that the US Dollar index (DXY) is likely to rebound modestly higher from current levels.”

According to Standard Chartered; “We see the recent US Dollar weakness as a reaction to worries that US policy is likely to result in lower demand for US assets. However, a refocus on growth-positive factors, such as tax cuts and deregulation, is likely to help reduce these concerns.”

It added; “We also find it interesting that, despite several days of downward pressure, the DXY index has not yet firmly broken below 99, suggesting its post-2021 100-110 range remains intact.”

US retail sales data held firm for March, but there were significant warning signs in the latest business confidence readings with expectations of weaker activity and higher inflation.

Fed Chair Powell reiterated that he was in no rush to adjust interest rates, while stating that the tariff impact is likely to be larger than expected with weaker activity and higher inflation.

President Trump criticised Powell strongly and effectively called for him to resign.

The ECB cut interest rates by a further 25 basis points with the deposit rate at 2.25% and warnings over the Euro-Zone growth outlook were reinforced by commentary from Bank President Lagarde.

According to MUFG; “Lagarde clearly did not want to entertain for any amount of time the potential for inflation to move higher. The focus was very much on negative growth concerns which reinforces the prospect of more rate cuts ahead.”

It now sees a risk that rates will be cut to 1.50%.

According to Deutsche, fair value for EUR/USD is in the 1.25-1.30 range which will act as an anchor for the pair amid geo-political uncertainty.

It also sees the risk of sustained global diversification away from the US dollar amid political uncertainty, trade concerns and weaker growth.

Deutsche Bank considers the potential risk of substantial capital flows out of US markets.

The bank notes foreigners own $7 trillion of American fixed income and $18 trillion of American equities. For example, European portfolio holdings of US equities have risen from 5% to 20% since 2010 and that unhedged FX exposure to US assets is very high.

A substantial reallocation of assets would involve heavy dollar selling.

The bank did note that a dovish ECB policy would curb Euro gains.

UBS considers that the Euro is vulnerable to a deeper correction; “We regard the euro’s recent move as an overextension and suggest waiting for short-term setbacks before engaging in EUR longs. Once the ECB halts its easing cycle, and the Fed resumes its rate cuts, we believe conditions will be ripe for the EURUSD to move higher in the latter part of the year.”

After being bullish for the past year, HSBC is notably less confident in the dollar; “US policy uncertainty is high and is weighing on the US Dollar Index (DXY) via risk aversion. There are questions about its structural properties. After considering the US current account position, fiscal risks and holdings of US securities, we think that the structural discussion around the USD is louder, and the tail risk is higher.

It added; “Putting these together tells us that the DXY will likely be in a softer position over the coming quarters.”

Citi forecasts the euro hitting highs around $1.20 in the next six to 12 months, before the dollar could start to make a comeback.

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TAGS: Currency Predictions Euro Dollar Forecasts