empty
26.03.2025 09:52 AM
Looks Like It's Time to Focus on the Euro and Yen (EUR/USD May Fall, USD/JPY May Rise)

Since mid-month, financial markets have been trying to recover while frantically analyzing all possible developments surrounding the trade war the U.S. launched against its largest trading partners.

Investor sentiment continues to be shaped by fears of a potential U.S. recession against the backdrop of global trade wars. No matter how hard it is for individual countries not directly involved in this web of economic and geopolitical contradictions to try to stay out of it, these events will inevitably affect everyone. The problem is that the U.S. plays such a significant role in the global financial and economic system that any recession would undoubtedly have far-reaching consequences.

In the tariff debate, Trump constantly contradicts himself, which has been fully reflected in market dynamics for the second month, creating chaos. His calls for American businesses to increase goods production and oil extraction run into the real issue of uncertainty about the national economy's future. In response to the looming chaos, companies will likely begin cutting capital expenditures, which would significantly reduce output in the real sector—something already signaled by the latest PMI data for the manufacturing sector, which has fallen below the 50-point threshold, indicating contraction.

With all these issues around, what can be profitable?

I would turn attention to the Forex market, where the U.S. dollar may gain support via the ICE Dollar Index and rise above the 105.00 mark. Currently, it stands at 104.33. A positive factor could be the implementation of high import tariffs against the EU. The euro may come under intense pressure. It has already priced in the EU's plan to fund its army with €800 billion and Germany's proposals to stimulate its economy by a similar amount. However, with no concrete action, the euro may be negatively impacted by the trade tariffs between the EU and the U.S. In this case, the EUR/USD pair may decline significantly.

There's also an interesting situation developing with the Japanese yen. Yields on 10-year Japanese government bonds have surged to 1.59%, the highest level in over 16 years. The reason is a statement by Bank of Japan Governor Kazuo Ueda that the central bank will continue to raise interest rates if previous economic forecasts are realized. Additionally, the governor noted that the Bank is gradually reducing its holdings of government bonds. Last week, the central bank kept rates unchanged, but its comments included a cautious stance on global economic risks—specifically, the potential fallout from increased U.S. tariffs. In this environment, the yen may continue strengthening against the dollar and other major currencies.

Assessing all of this, I believe the topic of the trade war will remain dominant in the markets for the foreseeable future and will directly impact investor sentiment.

This image is no longer relevant

This image is no longer relevant

Forecast of the Day:

EUR/USD

The pair is hovering above a strong support level at 1.0780. A break below could trigger a decline toward 1.0725 and then 1.0700. A potential entry point for short positions is around 1.0774.

USD/JPY

The pair is trading higher amid the surge in Japanese government bond yields and expectations of further Bank of Japan rate hikes. The pair may find support and rise toward 151.00, then 152.20. A potential entry point for long positions is around 150.67.

Pati Gani,
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 April 21? A Breakdown of Fundamental Events for Beginners

No macroeconomic events are scheduled for Monday—not in the U.S., the Eurozone, Germany, or the U.K. Therefore, even if the market was paying attention to the macroeconomic backdrop, today, there

Paolo Greco 06:30 2025-04-21 UTC+2

GBP/USD Overview – April 21: The Inertial Growth Continues

The GBP/USD currency pair continued its upward movement on Friday. If we had seen such price action away from peak levels, there would have been no questions. In essence

Paolo Greco 04:01 2025-04-21 UTC+2

EUR/USD Overview – April 21: The Market Sleeps, Only Trump Can Wake It Up

On Friday, the EUR/USD currency pair made no notable movements whatsoever. This was unsurprising, as Friday marked Good Friday, and Sunday was Easter. Many banks and trading venues were closed

Paolo Greco 04:01 2025-04-21 UTC+2

US Dollar: Weekly Preview

Is there light at the end of the tunnel? The US dollar will again try to answer that question in the new week. To briefly recap: over the past

Chin Zhao 01:01 2025-04-21 UTC+2

British Pound: Weekly Preview

Several fairly interesting reports were released in the UK, but they almost did not impact market participants' actions. Demand for the British pound increased on all five days except

Chin Zhao 01:01 2025-04-21 UTC+2

Euro: Weekly Preview

There were very few changes regarding the euro last week. We observed horizontal movement for most of the week, which naturally did not affect the current wave markup. I want

Chin Zhao 01:00 2025-04-21 UTC+2

Trump targets Powell

Yesterday, US President Donald Trump stated that he could dismiss Federal Reserve Chairman Jerome Powell, casting doubt on the idea of central bank independence. He also expressed frustration that policymakers

Jakub Novak 14:42 2025-04-18 UTC+2

EU increases pressure on US

The entire world is now watching the ongoing negotiations between the US and its key trading partners. Despite President Trump's loud claims that the talks are going well, there

Jakub Novak 14:04 2025-04-18 UTC+2

The Market Taken Hostage

Will the White House cross the Rubicon by initiating the dismissal of Jerome Powell from his position as Chair of the Federal Reserve? That would deal another blow to financial

Marek Petkovich 09:16 2025-04-18 UTC+2

Why Are Markets Frozen and What Are They Waiting For? (There is a possibility of continued Bitcoin and Ethereum consolidation in sideways ranges)

Today is Good Friday, a day Christians observe worldwide across all denominations. Market activity has noticeably decreased ahead of the Easter holiday, but this isn't the main reason for market

Pati Gani 09:00 2025-04-18 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.