empty
18.04.2025 03:39 AM
The Dollar Undid Everything Itself

He meant well, but it turned out the usual way. Donald Trump firmly believes that tariffs can replace income tax, generate massive revenue for the budget, and bring about a new golden age. However, even American companies that manufacture and sell goods within the U.S. risk taking a hit. Packaging may come from China, and finding new suppliers takes time. As a result, EUR/USD bears remain under pressure despite attempts to counterattack.

Trump still has a soft spot for U.S. stocks. Their recent decline followed the hawkish rhetoric of Jerome Powell. The Federal Reserve Chair blamed the White House's largest tariff hikes since the 1930s for potentially accelerating inflation and worsening labor market conditions. In response, Trump called him someone who makes responsible decisions too late and demanded an immediate rate cut.

USD Index and Economic Policy Uncertainty Trends

This image is no longer relevant

Rumors are circulating in the media that Jerome Powell might be next if the White House has already managed to remove senior officials. Could Trump pull off the impossible? That would be bad news for markets and the dollar. U.S. assets are already suffering from a loss of investor confidence. This trend could worsen if the market begins to doubt the independence of the Fed.

The U.S. President can only envy the European Central Bank, which just cut the deposit rate for the seventh time during the current monetary easing cycle—from 2.5% to 2.25%. Interestingly, the accompanying statement no longer included the phrase "policy remains restrictive." Could this mean that Governing Council members believe the easing cycle is coming to an end? If so, it might lend some support to EUR/USD.

In practice, halting monetary expansion could deprive European equities of key support. Capital may no longer flow from North America to Europe as quickly, and EUR/USD bears could launch another counterattack. The music may not play much longer on their street: the risk of the U.S. dollar falling into negative territory suggests that the dollar's best days could be behind it.

U.S. Dollar Reversal Risk Dynamics

This image is no longer relevant

This image is no longer relevant

Only Trump might be able to save it. But the Republican cannot abandon the tariff policy now—he's gone too far. There's no turning back. The only hope lies in progress in trade negotiations between the U.S. and other countries, especially Japan. If Tokyo can't reach an agreement with Washington, no one will.

Technically, on the daily EUR/USD chart, a 1-2-3 reversal pattern may be forming. However, to activate it, the price must fall below the local low at point 2, corresponding to the 1.129 level. If that happens, the chances of a pullback will increase; if not, it's best to stick with the current buying strategy.

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
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

What to Pay Attention to on June 9? A Breakdown of Fundamental Events for Beginners

No macroeconomic reports are scheduled for Monday. Thus, traders will have nothing to react to during the day. There is a high probability of flat or weak movements unless Donald

Paolo Greco 05:54 2025-06-09 UTC+2

GBP/USD Overview – June 9: Nonfarms Did Not Disappoint

The GBP/USD currency pair also traded lower on Friday and even settled slightly below the moving average line. While we constantly say there are no reasons for the pound

Paolo Greco 04:03 2025-06-09 UTC+2

EUR/USD Overview – June 9: A New Episode of the "American Circus"

The EUR/USD currency pair traded with a slight decline on Friday, which was driven by decent macroeconomic data from the U.S. However, reports from the Eurozone also turned out quite

Paolo Greco 04:03 2025-06-09 UTC+2

EUR/USD. Weekly Preview. Inflation and More Inflation

The upcoming trading week will revolve around American inflation. In the United States, data will be published on the growth of the Consumer Price Index (CPI), the Producer Price Index

Irina Manzenko 02:39 2025-06-09 UTC+2

U.S. Dollar: Weekly Preview

In the United States, as usual, there will be far more interesting events and news than in the Eurozone or the United Kingdom. Economic data will start arriving on Wednesday

Chin Zhao 00:55 2025-06-09 UTC+2

British Pound: Weekly Preview

In the United Kingdom, the news background for the upcoming week will be much more interesting, although I do not believe it will significantly impact market sentiment. The pound continues

Chin Zhao 00:55 2025-06-09 UTC+2

Euro Currency: Weekly Preview

Boredom—pure and simple. That's how the upcoming week looks for the European currency. I want to clarify from the beginning that this review focuses solely on the European news background

Chin Zhao 00:55 2025-06-09 UTC+2

The Market Realized That Money Isn't Everything

Which is stronger — money or power? The answer to this question became clear very quickly. In the conflict between the most influential president in the world, Donald Trump

Marek Petkovich 00:07 2025-06-09 UTC+2

Bitcoin Heads for Conflict

The biggest surprise of June has been the divergence between U.S. stock indices and cryptocurrencies. The S&P 500 and Bitcoin are typically considered risk assets, historically moving hand in hand

Marek Petkovich 00:07 2025-06-09 UTC+2

XAU/USD. Analysis and Forecast

Today, gold maintains a positive tone; however, bulls are acting cautiously, preferring to refrain from aggressive buying ahead of the release of the important U.S. Non-Farm Payrolls (NFP) report

Irina Yanina 15:30 2025-06-06 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.