April 3, 2025 – Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: EUR/USD Jumps Above 1.10 on US Recession Fears

The Euro (EUR) rallied sharply against the US Dollar on Thursday after President Trump’s imposition of tariffs increased fears over the US and global economy and sparked increased recession talk.

Danske Bank commented; “The new tariffs were generally stronger and broader than we and markets expected, and sent shockwaves through global markets amid worries that the aggressive duties will slow growth, hit corporate earnings, and increase inflation.”

There are fears that the Euro-Zone will be hit hard, but the Euro gained defensive support with the Euro to Dollar (EUR/USD) exchange rate hit 6-month highs just above the key 1.1000 level.

An exodus from US capital markets could support the Euro and undermine the dollar.

ING commented; “While a global trade war in theory is a euro-negative, the soft underbelly of the US economy is the dominant factor for EUR/USD right now. A much sharper sell-off in US equities, dragging US rates even lower, adds another nail in the coffin of US exceptionalism and could send EUR/USD over 1.10.”

It added; “Major medium-term resistance sits in the 1.11/12 area. It’s hard to call a major break of that unless US activity craters.”

According to Danske Bank; “we expect consolidation around current levels in the near term, with risks tilted to the upside.”

As part of its wider tariff plan, the US Administration has imposed a 20% tariff on goods imports from the EU.

At this stage, the EU has not announced any formal retaliation, but the rhetoric is tough.

According to European Commission chief Ursula von der Leyen said the new tax imports will see uncertainty spiral causing dire consequences for millions of people around the globe”.

She vowed that Europe would take a unified approach and warned that it is preparing countermeasures in case negotiations fail.

She added; “If you take on one of us, you take on all of us.”

There are potential interest rate implications with markets now pricing in over a 90% chance that the ECB will cut rates this month.

The chances of a May Fed rate cut have also increased to around 20% with around a 75% chance of a move by mid-year.

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TAGS: Euro Dollar Forecasts

April 3, 2025 – Written by Frank Davies

STORY LINK British Pound Climbs to Six-Month Best Against US Dollar as Trump Unveils Tariffs

At the time of writing, Pound US Dollar (GBP/USD) exchange rate was trading at $1.3148 – its highest level since October 2024 and up 1.3% from Wednesday.

The US Dollar (USD) suffered a sharp decline on Wednesday evening and into Thursday’s session after US President Donald Trump introduced sweeping new tariffs.

On what he declared ‘liberation day’, Trump announced a blanket 10% tariff on all imported goods, alongside increased reciprocal tariffs on countries that impose taxes on US exports.

The move intensified concerns that the US economy could slide into recession this year. Analysts at Barclays warned of a ‘high risk’ of recession, with rising inflation and higher unemployment adding to the economic uncertainty.

In response, USD tumbled, with the US Dollar index – which tracks the currency’s performance against a basket of rivals – plunging nearly 1.4% to its lowest level since October 2024.

Meanwhile, the Pound (GBP) capitalised on the US Dollar’s weakness, propelling GBP/USD to its highest level in six months.

While the UK will be affected by the new tariffs, the economic impact is expected to be significantly less severe than in the US. British exports to the US will face a 10% tariff, but this is a milder blow compared to the broader trade restrictions imposed on other nations.

Looking ahead, Trump’s aggressive tariff policy is likely to fuel further volatility in currency markets as traders assess the potential fallout and watch for retaliatory measures from other economies.

If global trade tensions escalate and recession fears deepen, the US Dollar could remain under pressure.

In addition, upcoming US economic data may influence GBP/USD. Friday’s non-farm payrolls report is expected to show a slowdown in job growth, which could further weigh on the ‘Greenback’ if it reinforces concerns about the health of the US economy.

Federal Reserve Chair Jerome Powell is also set to speak on Friday. Should he express worries about the economic impact of the trade war, GBP/USD could climb even higher, potentially testing new multi-month highs.

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TAGS: Pound Dollar Forecasts

Created on April 03, 2025

• During Thursday’s trading session, the bears’ control over the USD/JPY pair increased, with losses extending to the 146.80 support level.
• This is the lowest for the pair in over three weeks, before stabilizing around 147.25 at the time of writing.
• The pair’s losses increased as investors flocked to safe-haven assets after US President Donald Trump announced comprehensive reciprocal tariffs, raising fears of a devastating global trade war.

Trump imposed additional tariffs of 34% on China, bringing the total tariffs to 54%. Other major economies facing hefty tariffs include the European Union (20%), Japan (24%), India (26%), in addition to a base tariff of 10% on imports from all countries. Earlier this week, Bank of Japan Governor Kazuo Ueda warned that the new US tariffs could significantly impact global trade and economic growth. While the Bank of Japan is expected to raise interest rates again later this year, uncertainty about global trade and domestic economic conditions continues to overshadow the outlook.

Trading Tips:

We still recommend buying the US dollar against the Japanese yen, but without risk, spreading your trading amount across multiple levels, and monitoring the factors affecting the currency pair’s performance.

Japanese Stocks Negatively Affected by Trump’s Tariff Announcement

During today’s trading session and across stock trading platforms, the Nikkei 225 index fell 2.77% to close at 34,736 points, while the Topix index fell 3.08% to 2,569 points. Japanese stocks fell to their lowest levels in several months after US President Donald Trump announced comprehensive reciprocal tariffs, raising fears of a global trade war that could destabilize major economies.

Trump imposed 24% tariffs on Japanese goods, along with a 25% tariff on auto imports, dealing a severe blow to the Japanese auto industry. In response, Japanese Trade Minister Yuji Muto stated that his country would continue to request an exemption, announcing the formation of a task force to assess the impact of the US tariffs.

According to trading, all sectors declined, with heavy losses among the index’s leading companies, such as Mitsubishi UFJ (-7.2%), Toyota (-5.2%), Kawasaki Heavy Industries (-7.1%), Nintendo (-3.3%), and Advantest (-4.5%). In corporate news, Nissan shares fell 3.7% after reports confirmed it had suspended part of its production line in Mexico as previously planned.

Bank of Japan Governor Warns of Global Trade Risks

This week, Bank of Japan Governor Kazuo Ueda warned that the new US tariffs could have a significant impact on global trade and economic growth. In his speech to the Japanese parliament, Ueda stressed the uncertainty surrounding the potential effects of reciprocal tariffs on trade flows, business sentiment, and inflation. The new tariffs, which take effect on April 3, include 25% tariffs on car imports. These tariffs are in addition to existing US tariffs on aluminium and steel, and higher tariffs on all Chinese imports.

Ueda intends to raise these concerns at the upcoming G20 meeting, where US trade policies and their implications will be a major point of discussion. Analysts indicate that the economic fallout could influence the Bank of Japan’s interest rate decision, with a rate hike expected in the third quarter of 2025, possibly in July.

USD/JPY Technical analysis and Expectations Today:

According to the daily chart performance, the bears’ control over the USD/JPY pair is strengthening, and recent losses may push some technical indicators towards strong oversold levels, led by the Relative Strength Index (RSI) and the MACD indicator. Therefore, we recommend considering buying from the support levels of 146.70, 145.80, and 145.00, respectively. Conversely, on the same timeframe, the 152.00 resistance will remain the most important for the bulls to take control of the USD/JPY trend. Technically, the pair will continue to lean downwards until the reaction to the US jobs data announcement tomorrow, which will have an impact on market expectations for the future of the US Federal Reserve’s policies.

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Created on April 03, 2025

• Amid strong upward momentum, the GBP/USD pair rose to the 1.3128 resistance level, the highest level in about six months, driven by a sharp decline in the US dollar.
• Obviously, this was due to traders’ reaction to the latest round of reciprocal tariffs announced by US President Donald Trump.
• The US is set to impose a 10% tariff on all imports, with some countries subject to much higher rates. British imports will be subject to these tariffs.

Reactions to Trump’s Tariffs

This announcement triggered a flight to safe havens and a shift towards low-risk assets, as investors grew increasingly concerned about the potential impact on the global economy. For her part, British Foreign Secretary Reynolds stated that the US is Britain’s “closest ally” and that the government’s approach is to “remain calm and committed to securing this deal, which we hope will mitigate the effects of what was announced today.”

UK inflation was a factor in the pound’s decline ahead of the US tariffs. According to forex trading, the pound fell below $1.29, its lowest level in nearly two weeks, as traders reacted to the weaker-than-expected February inflation reading and the Spring Statement. Chancellor Reeves said that UK inflation is expected to average 3.2% in 2025, up from the 2.6% forecast in October. At the same time, growth forecasts for 2025 were lowered to 1% from 2%, and public sector net borrowing is expected to fall from £137.3 billion (4.8% of GDP) this year to £74.0 billion (2.1% of GDP) by 2029-30. However, compared to the October estimate, borrowing for 2025-26 is expected to be £12.1 billion higher (0.4% of GDP).

The UK government has already announced several policy changes to restore the government’s budget, including social welfare reforms, cuts in administrative spending, and a small set of tax changes. The UK’s annual inflation rate fell to 2.8% in February, slightly lower than the expected 2.9% but in line with the Bank of England’s forecast.

Trading Tips:

The pound will remain supported for some time, but beware of profit-taking.

UK avoids Trump’s tariffs, good for the exchange rate.

The British pound is experiencing sharp fluctuations following US President Donald Trump’s announcement of a 10% tariff on British imports. The 10% tariff imposed on Britain is much more lenient than those imposed on other countries, pushing the pound higher.

Here’s a look at some of the most significant tariffs:

20% on the European Union
34% on China
46% on Vietnam
24% on Japan

According to licensed trading company platforms, the British pound is rising against most major currencies, confirming its role as a safe haven in tariff trading. The GBP/USD exchange rate is higher at 1.3120, confirming that the dollar is a complete loser. This is understandable; ultimately, US consumers and businesses bear the costs of high imports. Also, the GBP/EUR exchange rate rose to 1.1989, a rise indicating that the EU’s 20% tariffs were lower than expected. In other markets, China-related currencies, such as the Australian dollar and the New Zealand dollar, are experiencing selloffs.

Trump asked a crowd gathered in the White House Rose Garden: “They’re charging us tariffs, and we’re charging them tariffs. How can anyone be upset?” Among other things, he specifically mentioned China and the European Union. “They’re deceiving us. It’s very sad to see this. It’s pathetic.”

He said, “India is very difficult. Very difficult.”

Regarding exchange rate reactions, we reported that the British pound entered the tariff announcements as a hedge due to its relatively low exposure. This is due to Britain’s declining manufacturing base, which keeps it balanced in goods trade with the United States.

Technical Analysis for the GBP/USD pair today:

Based on the performance on the daily chart, the GBP/USD pair is witnessing a strong upward movement towards levels that confirm this shift. Technically, from the resistance levels of 1.3120 and 1.3230, technical indicators will move towards strong overbought levels. Conversely, the currency pair will not abandon its upward recovery path without moving towards the support level of 1.2880 again. Finally, the GBP/USD may remain on its upward path until the reaction to the US jobs numbers tomorrow.

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• The USD/JPY outlook remains strongly bearish after Trump’s tariffs.
• BoJ and Fed divergence, along with falling US yields, lend more support to the yen.
• Tariffs pose a threat to Japan’s export-driven economy as well, igniting further uncertainty.

The USD/JPY outlook is predominantly bearish as the yen capitalizes on safe-haven appeal due to President Trump’s sweeping trade tariffs. The pair plummeted 1.2%, marking fresh 3-week lows near 147.20 during the early Asian session. With mounting fears of a US recession, investors are fleeing to the JPY, reinforcing its strength against the US dollar.

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Riskier assets saw a broader sell-off after the latest round of Trump’s tariffs. The stocks slipped, and bond yields dipped, creating a demand for conventional safe-haven assets. The US 10Y hit a YTD low at 4.0%, reinforcing the potential for a Fed rate cut.

The ongoing divergence between the Federal Reserve and the Bank of Japan further fueled the JPY rally. While the Fed is widely expected to cut rates, BoJ remains uncertain. Previously, market participants were expecting an aggressive stance from BoJ. However, Japan’s export-driven economy may suffer as a result of recent tariffs. Still, the recent Tokyo consumer inflation figures suggest that the BoJ may retain its hawkish stance.

Despite Trump’s tariffs favoring the US dollar in the long run, the likelihood of a rate cut and the risk of a recession has undermined the Greenback. According to Wells Fargo analysts, monetary easing is expected to be more pronounced in 2025-26, which could keep the dollar defensive.

Key Events for USD/JPY

Looking ahead, traders will primarily focus on the following:

• Weekly jobless claims
• ISM Services PMI

Still, the broader focus remains on trade development and China’s potential reaction.

USD/JPY technical outlook: Sellers looking at 146.55

The USD/JPY 4-hour chart shows a gloomy picture. The price is slipping towards the key support level at 146.55. The pair lies well below the 30-period SMA, posing a risk of a deeper downside. However, the RSI value reaches 30.0, which indicates an oversold zone. Hence, corrective upside can be expected.

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On the upside, the 30-period SMA is one tough nut to crack for the buyers. Meanwhile, a strong resistance level emerges at 151.15. The path of least resistance lies on the downside.

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• EUR/USD trades at its highest level since early October above 1.1000.
• US Dollar stays under strong bearish pressure following US Pres. Trump’s tariff announcements.
• The pair turns technically overbought in the near term.

EUR/USD gathers bullish momentum in the European session on Thursday and trades at its highest level since early October above 1.1000. Although the pair’s near-term technical outlook points to overbought conditions, buyers could retain control amid the broad-based US Dollar (USD) weakness.

US President Donald Trump announced on “Liberation Day” that they will impose a 10% baseline tariff, effective April 5, on all imports to the US. The Trump administration will also impose higher reciprocal tariffs, which will go into effect on April 9, on about 60 countries they describe as “worst offenders.” The European Union will be within that list, facing 20%, tariffs.

In response, European Commission President Ursula von der Leyen said early Thursday that the US’ tariffs will be a major blow to the world economy. “We are preparing a further package of measures to protect our interests,” she added.

Investors grow increasingly concerned over the potential negative impact of the US’ new trade regime on the economic outlook. In turn, the USD suffers large losses against its major rivals. At the time of press, the USD Index was down about 1.4% on the day at 102.25.

In the second half of the day, the US economic calendar will feature weekly Initial Jobless Claims and March ISM Services Purchasing Managers Index (PMI) data. Investors are likely to ignore these releases and remain focused on trade war-related headlines.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart rises toward 80, reflecting overbought conditions for EUR/USD. On the upside, 1.1040 (static level) aligns as next resistance level before 1.1100 (static level, round level).

In case EUR/USD drops below 1.1000 (static level, former resistance) and starts using this level as resistance, it could extend its correction toward 1.0950 (static level) and 1.0900 (static level, round level).

EUR/USD price surged in latest intraday trading, confirming its exit from a descending correctional price channel in the short term, while also shaking off negative pressure from the 50-candle SMA, regaining its footing amid the dominance of the main upward trend, while readying to tackle the pivotal resistance of $1.0945.

NZD/USD price engaged in highly volatile trading in the intraday levels after managing to exit the descending correctional price channel in the short term yesterday, however, it quickly bounced lower after the current resistance of $0.5762 held on, as the price tries to gather positive momentum that could help it pierce that resistance, thus leaning on the support of the 50-candle SMA and bouncing higher once more after receiving a boost.

Created on April 02, 2025

• The euro has initially tried to rally a bit during the trading session on Tuesday, only to turn around and show signs of negativity.
• That being said, we felt rather drastically, only to see a weaker than expected Manufacturing PMI number in the United States suggesting that perhaps the US economy is starting to slow down a bit.
• If that is going to be the case, then it makes quite a bit of sense that we would see traders bet on the idea that the Federal Reserve might have to get a little bit looser with monetary policy.
• Whether or not that’s actually true remains to be seen, but it is the thought process that a lot of people are contemplating.

Uptrend Still Here

The euro is still technically in an uptrend, as we launched straight up in the air a few weeks ago, and despite the fact that we have been somewhat quiet recently, the reality is that we have pulled back just a bit, but we have also seen quite stable trading, that’s actually a good sign for the uptrend to continue given enough time, so we will have to wait and see how that plays out. Ultimately, this is a situation where we will have to pay close attention to whether or not momentum picks up, because the momentum is the one thing that will really get this thing going. As things stand right now, there just isn’t a lot going on, although risk is most certainly skewed to the upside.

A short-term pullback at this point in time could send this market looking to the 200 Day EMA, just below the 1.07 level. If we were to pull back to that area, technical traders would more likely than not look at the 200 Day EMA in order to try to find some type of technical support. Whether or not it would get it remains to be seen, but I recognize that it’s more likely than not that we would find buyers jumping in between here and there.

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