Forex Analysis & Reviews: 02.05.2025 - The Dollar Demands the...

Live Chat

InstaForex Loprais Team - Official participant of the Dakar rally

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex - Official partner of Dragon Racing

02.05.2025 01:02 AM

The Dollar Demands the Impossible

The market has finally found relief after America's Liberation Day. Stock indices are ready to recover the ground lost following the White House's implementation of sweeping tariffs amid expectations of strong earnings from the "Magnificent Seven" companies. Against this backdrop, EUR/USD bears attempted a counterattack. However, the erosion of trust and the decline of American exceptionalism weigh heavily on the U.S. dollar.

After the turmoil of April, the market has started to accept that Donald Trump likely doesn't want higher tariffs. He introduced them as a tactic to force other countries to the negotiating table and to compel them to lower tariffs previously imposed on U.S. goods. Theoretically, this would pave the way for freer international trade and a brighter future for the United States.

Unfortunately, tariffs in most countries are already lower than in the U.S. What can they really offer Washington? Increased purchases of American goods? As the first trade war showed, China made such promises but didn't deliver. Nevertheless, for the markets, even a phony deal can be enough to spark optimism.

S&P 500 and Global Equity Index Performance

As long as the current 90-day truce remains in effect, the negative impact on competing economies — including the eurozone — is unlikely to be felt. In Q1, the euro area's GDP grew by 0.4% quarter-over-quarter and 1.4% year-over-year, driven by export growth. A repeat in Q2 is entirely possible. Unsurprisingly, non-U.S. equities continue to outperform the S&P 500, including in terms of recovery speed after downturns. If this trend continues, the capital flow from North America to Europe will continue to support the EUR/USD rally.

According to Danske Bank, the euro should be bought on pullbacks against the U.S. dollar for several reasons. The U.S. is facing a crisis of trust. Restoring it would require a series of favorable political signals — which seems unlikely. Ongoing uncertainty in White House policy keeps demand high for safe-haven assets, and the euro currently plays that role more effectively than the dollar. Finally, U.S. data is being ignored, and markets are listening only to White House officials — a trend that can't last forever.

Regardless of what Donald Trump says, U.S. recession risks are growing rapidly. Former Federal Reserve Chair Janet Yellen is convinced of it, and current FOMC members are also likely becoming concerned. The May Fed meeting may be the perfect opportunity to signal future rate cuts, which would drag the dollar down even further.

Technically, on the daily EUR/USD chart, a breakout below the 1.130–1.140 consolidation range was attempted. The failure of this breakout confirms the bears' weakness and increases the likelihood of the "Spike and Ledge" pattern morphing into a "False Breakout." A euro return to $1.136 would serve as a buy signal.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.