Markets enter this week amid significant U.S. dollar weakness, stemming from political instability, renewed expectations of aggressive Fed rate cuts, and a broader risk-off mood. While the European Central Bank has already begun easing, and the Bank of Japan maintains an ultra-loose stance, it’s the chaos in U.S. policymaking, particularly surrounding Trump’s antagonism toward Fed Chair Powell, that is driving capital flows and volatility.
Investors are reducing exposure to the U.S. dollar in anticipation of lower rates, possible Fed leadership changes, and increasing geopolitical and trade tensions, especially with China. Meanwhile, risk sentiment remains fragile, influencing commodity-linked currencies like the AUD and safe havens like Gold and JPY.
🇪🇺/🇺🇸 EUR/USD
Euro Climbs Amid Dollar Weakness, Despite ECB Cuts
Analysis:
- The ECB cut rates for the sixth consecutive time, signaling a full pivot to monetary easing. Despite this, the euro has risen ~5% in April, driven less by euro strength and more by dollar aversion.
- The absence of Eurozone data and a focus on U.S. Fed speakers (like Goolsbee) make EUR/USD reactive to U.S. sentiment shifts.
- The ECB dropped reference to “restrictive” policy, reflecting slower growth and growing trade pressures.
Key Factors:
- Rate divergence shrinking between ECB and Fed
- U.S. political risk and anti-Fed rhetoric (Trump vs. Powell)
- Ongoing risk reallocation away from the USD
Forecast: The euro is likely to continue climbing, especially if U.S. rate cut expectations intensify. However, the pace may slow due to the Eurozone’s own economic challenges.
Support levels: 1.1246, 1.1157, 1.1088, 1.0960
Resistance levels: 1.1496, 1.1608 (medium-term), 1.1750 (longer-term stretch)
🇬🇧/🇺🇸 GBP/USD
Pound Holds Firm but Lacks Domestic Drivers
Analysis:
- GBP has been largely riding the wave of dollar weakness, as UK markets were closed for Good Friday and economic updates are sparse.
- Traders are cautious ahead of upcoming UK data (on inflation, labor market, and PMI), which could either support the recent gains or spark a correction.
- The pound recently tested 1.3399 and 1.3413, areas of buying interest.
Key Factors:
- No UK news has allowed bullish momentum to continue, but this calm is temporary.
- U.S. monetary policy expectations and global market sentiment dominate.
- Awaiting return of UK market liquidity and key macro data this week.
Forecast: Expect modest near-term upside for GBP/USD, with potential spikes toward 1.3450. However, risks include sharp volatility around UK data and shifts in Fed tone.
Support levels: 1.3207, 1.3121, 1.3030, 1.2891, 1.2743
Resistance levels: 1.3305, 1.3451, 1.3510
🇺🇸/🇯🇵 USD/JPY
Dollar Under Pressure, Yen Holds Ground Amid Global Risk Aversion
Analysis:
- USD/JPY has weakened toward the 140.45–141.61 support zone as risk-off flows support the yen.
- Japan’s core inflation rose to 3.2%, in line with expectations, but overall CPI slowed. The Bank of Japan is expected to hold rates at its next meeting.
- Political instability in the U.S., combined with a souring outlook for global growth, is leading investors to seek safety in JPY.
Key Factors:
- Global risk aversion benefiting JPY
- U.S. rate cut speculation increasing
- Japan’s economic outlook could be revised down due to trade tensions
Forecast: USD/JPY may see further declines toward 139.94, especially if dollar selling accelerates. However, BOJ passivity could limit gains for the yen beyond 138.50.
Support levels: 142.21, 141.61, 140.45, 139.94
Resistance levels: 144.08, 145.14, 147.14
🇦🇺/🇺🇸 AUD/USD
Aussie Recovers, Buoyed by China and U.S. Dollar Weakness
Analysis:
- The Australian dollar is rallying, up 0.58% recently, after strong Chinese data and a steady hand by the PBOC boosted confidence in Australia’s largest trading partner.
- Meanwhile, Trump’s threats to fire Powell and the crumbling U.S. dollar create further upward pressure on AUD/USD.
- Despite the rally, the pair is nearing key resistance around 0.6422–0.6467, a reversal zone on higher time frames.
Key Factors:
- Strong Chinese Q1 data (GDP +5.4%, strong retail and industrial output)
- Trade war escalation casts shadow over medium-term sentiment
- U.S. dollar weakness remains the primary driver
Forecast: AUD/USD could rise slightly more, but major gains are capped unless China’s April data holds up. Watch for a stall or reversal near 0.6460.
Support levels: 0.6348, 0.6303, 0.6280, 0.6230
Resistance levels: 0.6422, 0.6467
🌕 Gold (XAU/USD)
Safe Haven Demand Returns as Dollar Cracks
Analysis:
- Gold continues to benefit from the weakening U.S. dollar, falling yields, and increased geopolitical and economic risk.
- As investors flee from U.S. assets, gold has emerged as a core safe haven. Trump’s destabilizing influence on U.S. fiscal and monetary policy is adding urgency to hedge through gold exposure.
- Inflation concerns remain, but so do worries over stagflation — supporting gold in both directions.
Key Factors:
- Sharp decline in USD Index likely to break below 98.00
- Fed expected to pivot more aggressively, weakening the dollar further
- Political instability and trade tensions increase demand for non-yielding safe havens
Forecast: Gold could continue its climb, with an eye on $2,430–2,500 if the dollar index breaks below 96.50. Minor pullbacks are possible but likely to be bought aggressively.
Support levels: $2,360, $2,325, $2,285
Resistance levels: $2,430, $2,500
📊 Summary Table: As of April 22, 2025
Summary Forecast Table
| Asset | Trend | Key Drivers | Support Levels | Resistance Levels | Forecast Direction |
|---|---|---|---|---|---|
| 🇪🇺 EUR/USD | Bullish | Fed rate cuts, U.S. political risk, ECB easing | 1.1246, 1.1157, 1.0960 | 1.1496, 1.1608 | Higher |
| 🇬🇧 GBP/USD | Cautiously Bullish | Thin market, Fed uncertainty, pending UK data | 1.3207, 1.3030, 1.2891 | 1.3305, 1.3451 | Slightly Higher |
| 🇺🇸 USD/JPY | Bearish | Risk aversion, Fed cut bets, BOJ dovish stance | 141.61, 140.45, 139.94 | 144.08, 145.14 | Lower |
| 🇦🇺AUD/USD | Neutral to Bullish | China strength, USD weakness, trade war risks | 0.6348, 0.6280, 0.6230 | 0.6422, 0.6467 | Slightly Higher, then Rangebound |
| 🪙 XAU/USD | Bullish | Safe haven flows, dollar sell-off, political chaos | $2,360, $2,325 | $2,430, $2,500 | Higher |
