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

NZD/USD. Analysis and Forecast

The NZD/USD pair is attempting to regain positive momentum, supported by renewed US dollar selling. However, given the underlying fundamentals, bullish traders are advised to proceed with caution. Investors appear

Irina Yanina 19:45 2025-04-08 UTC+2

Market gives away its secret

The world is a stage, and people are its actors. Tragicomedies happen every day in financial markets, but what happened at the start of the second week of April

Marek Petkovich 11:49 2025-04-08 UTC+2

Will Tomorrow Be Better Than Yesterday? (There is a risk of renewed decline in AUD/USD and gold prices)

It's easy to stay optimistic and hope that decision-makers act according to your wishes. Why does this occur? And why can it be a trap for investors? The market sell-off

Pati Gani 09:25 2025-04-08 UTC+2

What to Pay Attention to on April 8? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic events scheduled for Tuesday. However, the current market environment is hardly affected by the macroeconomic background. At this moment, the market has no use for standard

Paolo Greco 07:35 2025-04-08 UTC+2

GBP/USD Overview. April 8. Now It's the Pound Plunging into the Abyss

The GBP/USD currency pair continued its near-crash-like decline throughout Monday. Can anyone even explain, in hindsight, what's happening in the markets right now? There are no questions regarding the drop

Paolo Greco 06:07 2025-04-08 UTC+2

EUR/USD Overview. April 8. 2025 – The Year of Trade Wars

The EUR/USD currency pair traded with notable volatility on Monday. Particularly for a so-called "boring Monday," with no significant events scheduled. Yet yesterday was anything but boring—many experts have already

Paolo Greco 06:07 2025-04-08 UTC+2

The Pound Attempts to Hold Within the Bullish Channel

The United Kingdom is among the few G20 countries that got off relatively lightly—it was hit with a 25% tariff on car exports and a 10% tariff on other goods

Kuvat Raharjo 00:58 2025-04-08 UTC+2

The Euro Adopts a Coyote Tactic

If someone strikes your left cheek, there's no need to plead for mercy. Interestingly, more than 50 countries, according to the White House, have done just that. But not China

Marek Petkovich 00:56 2025-04-08 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is regaining ground after Friday's decline, trading just below the psychological level of 1.1000 amid mixed signals. The U.S. dollar is struggling to capitalize

Irina Yanina 18:55 2025-04-07 UTC+2

XAU/USD. Analysis and Forecast

At the moment, gold has halted its corrective decline from the all-time high reached last week. The recent plunge in global financial markets, triggered by the mutual tariffs initiated

Irina Yanina 18:52 2025-04-07 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.