The global financial landscape continues to be heavily influenced by political developments, particularly from the United States under President Trump’s second term. His trade policy pivots are creating ripple effects across major currency pairs and commodities, overriding traditional economic indicators in many cases. While central bank policy and macroeconomic data remain critical, markets are now increasingly sensitive to headline risk and geopolitical shifts.
🇪🇺/🇺🇸 EUR/USD: Outlook – Euro vs U.S. Dollar
Market Overview:
EUR/USD continues to exhibit bullish momentum, driven primarily by political developments in the U.S. rather than internal eurozone strength. The transformative impact of President Trump’s erratic and protectionist trade policy has weakened the U.S. dollar significantly since late February. Markets are pricing in a high probability of a Fed rate cut in June to counter economic uncertainty and tariff impacts, further pushing the dollar lower.
European data, while mixed, helped stabilize the euro. Industrial production saw an unexpected 2.6% monthly surge in March, likely due to rising domestic demand amid trade disruptions. However, GDP growth remains tepid at just 0.3% QoQ in Q1, underlining the eurozone’s ongoing stagnation.
Key Drivers:
- Trump’s Trade Policy: Major source of dollar weakness.
- Eurozone Data: Industrial growth temporary; GDP weak.
- Monetary Policy Divergence: Fed dovish; ECB cautious but opening door to rate cuts.
Forecast:
If Trump’s trade protectionism persists, further dollar weakness is likely, supporting EUR/USD gains. The bullish wave structure suggests continued momentum toward 1.25 over the medium term. However, any reversal in Trump’s stance could abruptly halt the rally.
Support & Resistance:
- Support: 1.1164, 1.1088, 1.1017, 1.0902
- Resistance: 1.1293, 1.1379
- Bullish Targets: 1.1572 (short-term), 1.25 (medium-term if trend persists)
🇬🇧/🇺🇸 GBP/USD Outlook – British Pound vs U.S. Dollar
Market Overview:
The GBP/USD pair mirrors the EUR/USD pattern, with dollar weakness fueling a bullish impulse. While UK data presents a mixed picture—stronger-than-expected GDP at +0.7% QoQ versus weaker industrial production—the pound remains bid, driven more by the global macro narrative than domestic fundamentals.
Bank of England officials continue to display caution. Rising unemployment and slowing wage growth have dimmed prospects for immediate rate hikes, but not enough to weaken the currency in the face of broader dollar depreciation.
Key Drivers:
- US Policy Uncertainty: Drives overall GBP/USD trend.
- UK Economic Data: Mixed but not pivotal in current climate.
- BoE Caution: Limits upside but doesn’t trigger reversals.
Forecast:
Wave analysis supports a continuation of the bullish trend with targets at 1.3541 and 1.3714. The 1.3356 resistance is a key inflection point. Any consolidation above this level could trigger another impulsive leg upward.
Support & Resistance:
- Support: 1.3253, 1.3121
- Resistance: 1.3322, 1.3356, 1.3382
- Bullish Targets: 1.3541, 1.3714
🇺🇸/🇯🇵 USD/JPY Outlook – U.S. Dollar vs Japanese Yen
Market Overview:
USD/JPY has entered a corrective phase after failing to consolidate above 148.28. The pair dropped sharply toward 145.71 amid global risk-off sentiment, a modest rebound in Asian currencies, and ongoing trade uncertainty. The yen, often a safe haven, benefited from the perception that the Trump administration favors a weaker dollar.
Despite this correction, the broader structure remains tilted toward bullishness in the medium term. However, short-term price action suggests vulnerability, particularly if 144.80 support fails.
Key Drivers:
- Global Trade Uncertainty: Boosting yen safe-haven flows.
- US Dollar Correction: Affects USD/JPY more than JPY strength.
- BOJ Policy Stance: Still ultra-loose, capping yen appreciation longer-term.
Forecast:
USD/JPY may remain under pressure in the short term. A clean break below 144.80 would shift the bias downward. However, if the pair rebounds from 145.71, renewed buying interest may emerge targeting a retest of 148.28 and possibly 150.47.
Support & Resistance:
- Support: 147.61, 146.27, 145.71, 144.80
- Resistance: 148.28, 150.47
- Bearish Target: 143.45 if support breaks
🇦🇺/🇺🇸 AUD/USD Outlook – Australian Dollar vs U.S. Dollar
Market Overview:
The Australian dollar is under pressure despite a blowout jobs report that saw 89,000 new positions in April. Markets remain laser-focused on the Reserve Bank of Australia’s upcoming rate decision, with a 25-basis-point cut widely expected. The RBA is juggling a resilient labor market with tepid consumer demand, softening business sentiment, and global trade uncertainty.
The recent 90-day tariff truce between the U.S. and China offers some relief but hasn’t fundamentally changed the Aussie’s bearish setup, especially as expectations grow for an accelerated pace of rate cuts.
Key Drivers:
- Strong Labor Market: A positive but overshadowed by rate cut expectations.
- Global Trade Conditions: Still fragile, especially for export-reliant Australia.
- RBA Policy Outlook: Set to cut rates next week; dovish forward guidance expected.
Forecast:
AUD/USD remains vulnerable, particularly if the RBA surprises with a more aggressive easing bias. A break below the 0.6340–0.6360 support zone could trigger another leg lower, while resistance at 0.6454 caps short-term upside.
Support & Resistance:
- Support: 0.6410, 0.6398, 0.6360, 0.6340
- Resistance: 0.6438, 0.6454
- Bearish Target: Below 0.6340 if rate cut outlook intensifies
🪙 XAU/USD Outlook – Gold vs U.S. Dollar
Market Overview:
Gold has remained resilient despite recent dollar volatility and shifting rate expectations. Ongoing trade policy instability, geopolitical uncertainty, and the high probability of a Fed rate cut are all supportive of the yellow metal. Lower yields and a weaker dollar continue to increase gold’s appeal as a hedge.
Even as markets exhibit some risk-on behavior following temporary trade truces, the underlying lack of clarity from the Trump administration limits investor confidence, keeping gold well-bid.
Key Drivers:
- Trade Uncertainty: Sustains gold demand as a safe haven.
- Fed Rate Cut Expectations: Supportive for non-yielding assets like gold.
- Inflation Trends and Real Yields: Currently supportive for gold.
Forecast:
Gold remains in a medium-term uptrend with potential to test the $2,400 level if the Fed proceeds with cuts and risk aversion grows. Key support near $2,310 should be watched; a break below could signal short-term consolidation or correction.
Support & Resistance:
- Support: $2,310, $2,275, $2,222
- Resistance: $2,385, $2,422
- Bullish Target: $2,450 (medium-term)
📊 Summary Table: As of May 16, 2025
| Asset | Trend | Key Drivers | Forecast Bias | Key Levels |
|---|---|---|---|---|
| 🇪🇺 EUR/USD | Bullish | US trade policy, weak USD, limited eurozone growth | Upward bias | Support: 1.1164 / Resistance: 1.1293, 1.1379 |
| 🇬🇧 GBP/USD | Bullish | USD weakness, BoE caution, mixed UK data | Upward bias | Support: 1.3253 / Resistance: 1.3356, 1.3541 |
| 🇺🇸 USD/JPY | Mixed/Bearish | Risk-off flows, weaker USD, BOJ easing | Short-term down | Support: 145.71 / Resistance: 148.28 |
| 🇦🇺 AUD/USD | Bearish | RBA rate cuts, trade dependency, soft domestic demand | Downward bias | Support: 0.6360 / Resistance: 0.6454 |
| 🪙 XAU/USD | Bullish | Fed rate cut expectations, global uncertainty | Upward bias | Support: $2,310 / Resistance: $2,385, $2,422 |
