empty
27.03.2025 12:41 AM
The Dollar Will Loosen Its Grip

The euro is retreating cautiously, worried about a potential trade war between the European Union and the United States, while the dollar is on track for its worst month in over a year. Five consecutive days of EUR/USD declines have slightly improved the greenback's position, but the truth is hard to ignore—widespread disappointment with Donald Trump's policies is prompting traders to sell the dollar.

Speculators have become net sellers of the U.S. dollar for the first time since the November presidential election. Citigroup has lowered its forecast for the dollar over the next 6 and 12 months, and Credit Agricole also expects the USD index to fall. The bank admits it underestimated the impact of trade wars, public sector layoffs, and immigration restrictions on the U.S. economy. According to their outlook, the economy will cool faster than anticipated, providing a reason to buy EUR/USD.

Speculative positioning on the U.S. dollar

This image is no longer relevant

Before the 47th president's inauguration, markets were convinced that White House tariffs would hurt other economies more than the U.S. However, recent data suggests otherwise. Weak retail sales, consumer sentiment, and business activity in the U.S. point to a potential slowdown in GDP growth in Q1. Europe, by contrast, is benefiting from the front-loading of U.S. imports ahead of the tariffs and Germany's fiscal stimulus.

Rising European purchasing managers' indices, business climate indicators, and consumer confidence give EUR/USD a bullish tone. The U.S. tariff threat still looms over the eurozone, but it's a double-edged sword. Bank of France Governor Francois Villeroy de Galhau stated that the tragedy of Donald Trump's policy is its replacement of a win-win economic scenario with one where everyone ends up losing.

The more tariffs imposed, the higher the risk of a U.S. recession. The White House understands this, which is why there are growing rumors in the media about selective tariffs, delays in duties on car imports, semiconductors, and pharmaceuticals, and the possible exclusion of certain countries from the blacklist. No one knows what the outcome will look like.

This image is no longer relevant

Still, a large-scale U.S.–EU trade war remains the main risk factor for the EUR/USD uptrend. Germany's fiscal stimulus may cushion the blow to the eurozone economy but won't eliminate it. Meanwhile, the White House is preparing for tax cuts, which could support the U.S. dollar. There are many possible outcomes—traders must adjust their outlooks and positions accordingly.

On the daily EUR/USD chart, bears have pulled the pair away from its fair value at 1.0845. A break below the local low at 1.0775 could extend the decline. However, a rebound from 1.0715 would serve as a signal to buy.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Chancy Deposit
    Deposit your account with $3,000 and get $8000 more!
    In March we raffle $8000 within the Chancy Deposit campaign!
    Get a chance to win by depositing $3,000 to a trading account. Having fulfilled this condition, you become a campaign participant.
    JOIN CONTEST

Recommended Stories

AUD/USD: Analysis and Forecast

The AUD/USD pair continues its sideways consolidation, remaining within a familiar range near the key psychological level of 0.6300. This movement is driven by several factors impacting global market sentiment

Irina Yanina 11:16 2025-03-28 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is consolidating near the key psychological level of 1.0800, showing no intention of retreating below 1.0780 as traders and investors await the release of the U.S

Irina Yanina 10:45 2025-03-28 UTC+2

Markets at a Crossroads Ahead of Tariff Announcement by D. Trump (Possible Decline in CFD Contracts on #SPX and #NDX Futures)

Markets are now fully convinced that the U.S. President will follow through on his plans to implement severe customs tariffs aimed at closing the domestic market and, in doing

Pati Gani 10:39 2025-03-28 UTC+2

Markets Have Found the Culprits

If you don't get it the first time, you will the second. The S&P 500 sell-off, led by U.S. and foreign automaker shares, continued a second day after the imposition

Marek Petkovich 08:19 2025-03-28 UTC+2

What to Pay Attention to on March 28? A Breakdown of Fundamental Events for Beginners

A fair number of macroeconomic events are scheduled for Friday, but we believe they will likely trigger only a localized market reaction. The UK will publish Q4 GDP data

Paolo Greco 06:26 2025-03-28 UTC+2

GBP/USD Pair Overview – March 28: The Pound Barely Fell Before Rising Again

The GBP/USD currency pair traded higher again on Thursday, even though a semblance of a downward correction had begun just a few days earlier. The market had already digested

Paolo Greco 03:00 2025-03-28 UTC+2

EUR/USD Pair Overview – March 28: Donald Trump Loves Surprises

The EUR/USD currency pair maintained its downward bias on Thursday, although it traded higher throughout the day. Volatility remained low once again, indicating weak market activity. However, traders had enough

Paolo Greco 03:00 2025-03-28 UTC+2

EUR/USD. Trump Sends the Dollar into Knockdown Again

The EUR/USD pair is experiencing a correction following Donald Trump's latest statements, as he has once again reignited the tariff war. Interestingly, the greenback initially reacted positively to the president's

Irina Manzenko 23:44 2025-03-27 UTC+2

Gold Knows the Path to Victory

Gold was not a market favorite following Donald Trump's victory in the November elections. In fact, it pulled back once the red wave became clear and the Republican's return

Marek Petkovich 10:55 2025-03-27 UTC+2

XAU/USD – Analysis and Forecast

Gold continues to hold its intraday gains, trading near the weekly high around the $3036 level. This is due to several factors, including uncertainty surrounding U.S. trade policy

Irina Yanina 10:44 2025-03-27 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.