EUR/USD OUTLOOK: WHY THE DOLLAR KEEPS FALLING?

EUR/USD OUTLOOK: WHY THE DOLLAR KEEPS FALLING?

On April 15, 2025, the U.S. dollar continued its decline against the euro, influenced by escalating trade tensions and tariff policies.

President Trump's imposition of new tariffs on Chinese imports has led to increased market uncertainty, prompting investors to seek safer assets and reducing demand for the dollar.

A Bank of America survey revealed that institutional investors are increasingly pessimistic about U.S. assets, with over 60% anticipating further depreciation of the dollar.

This shift is attributed to concerns over the U.S. economic outlook and the potential for a "dollar confidence crisis," reminiscent of the 1971 Bretton Woods collapse.

Despite strong retail sales data, Federal Reserve Chairman Jerome Powell's recent remarks suggest a cautious approach to monetary policy, with no immediate plans for interest rate hikes.

This dovish stance has diminished investor confidence in the dollar, contributing to its ongoing weakness.

In contrast to the U.S., the Eurozone's economic indicators, such as inflation rates and monetary policy expectations, have provided support to the euro.

The European Central Bank's anticipated rate cut has been largely priced into markets, and the euro remains strong amid the dollar's decline.

Technical analysis shows that EUR/USD has maintained robust positioning above key moving averages, indicating sustained bullish momentum.

Market sentiment appears pro-euro, with leveraged and institutional traders holding significant long euro positions.