Created
: 2025.05.01
2025.05.01 21:17
Uncertainty may be a prevailing theme of the Trump presidency, but over the past month a number of lessons have been learnt which will likely have an ongoing impact on both the behaviour of politicians as well as investors. Firstly, the safe haven attraction of US treasuries and the USD are not as gold-plated as had been assumed. Secondly, China's defiance in the face of the trade war with the US has forced the market to reassess the strengths and vulnerabilities of both sides. As a result, speculation that it might be the US, rather than China, that blinks first has gathered some support, Rabobank's FX analyst Jane Foley reports.
"Both of these factors suggest that Trump's hand in driving deals with the US' trading partners may not be as strong as he had expected. We see scope for EUR/USD to drop back as far as 1.10. That said, US fundamentals have weakened and we see the greenback on a weaker trajectory over the medium-term. We forecast the currency pair at EUR/USD1.15 on a 12-month view."
"On the back of Trump's trade war, Rabobank now sees the chances of a US recession as being larger than 50%. That said, in view of the inflationary risks associated with tariffs we don't expect the Fed to be able to cut rates as much as the market is expecting. A less dovish than expected Fed should provide some support for the USD in the weeks ahead. A corrective move lower in EUR/USD may also stem from profit-taking in long EUR positions. "
"This morning, press reports indicated that the EU may be preparing a plan to lower tariff and non-tariff barriers. This could be presented to the White House next week to jump start trade talks. If more constructive news on this front is forthcoming, we would expect the USD to benefit from short covering. That said, in view of US recession risks, we would also expect the USD to struggle to hold these gains over the medium-term."
Created
: 2025.05.01
Last updated
: 2025.05.01
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy