U.S. Tariff & Economic Concerns Weigh on Dollar 

USD index 

Last week, market fears of slowing economic growth and the uncertainty surrounding U.S. tariff policies kept the USD Index under pressure. President Trump’s shifting stance on tariffs targeting Mexico and Canada added further volatility, while Germany’s unexpected spending proposal fueled concerns about policy shifts among major global economies. 

• Last week, the USD Index fell sharply below the key 107.50 level, forming a strong bearish candlestick, indicating strong downside momentum. 

• This week, focus remains on the 104.36 pivot level. 

• If the index stays below 104.36, watch for support at 101.85 and 100.53. 

• If it rebounds above 104.36, resistance levels to watch are 105.56 and 107.50. 

EUR/USD 

The euro strengthened last week, driven by hawkish ECB policy and Germany’s large-scale spending proposal, which boosted bond yields. However, the eurozone still faces dual economic pressures: 

1. Trump’s tariff policies increase export uncertainty, leading to a GDP growth forecast cut for 2025 (from 1.1% to 0.9%). 

2. Rising military expenditures due to geopolitical tensions put additional strain on fiscal budgets. 

• Last week, EUR/USD broke above the key 1.05 level and surged, triggering strong bullish momentum. 

• This week, focus remains on the 1.0778 pivot level. 

• If EUR/USD stays above 1.0778, watch for resistance at 1.0940 and 1.1143. 

• If EUR/USD falls below 1.0778, support levels to monitor are 1.0632 and 1.0500. 

USD/JPY 

Last week, growing expectations of further rate hikes by the Bank of Japan (BOJ), coupled with global concerns over U.S. tariffs and economic slowdown risks, supported yen strength due to increased safe-haven demand. 

However, Japan’s economy remains highly sensitive to U.S. economic downturns. Historically, every U.S. recession in the past 50 years has dragged Japan into recession as well. If the U.S. economy weakens further, the BOJ may slow or pause its rate hike cycle. 

• Last week, USD/JPY continued its downward trend, with bearish momentum remaining dominant. 

• This week, focus is on the 146.44 pivot level. 

• If USD/JPY rebounds from 146.44, resistance levels to watch are 149.24 and 152.05. 

• If USD/JPY breaks below 146.44, further downside targets include 144.01 and 140.33. 

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Disclaimer

The information provided herein is for informational purposes only and does not constitute an offer or solicitation to buy or sell any financial instruments. Trading Contracts for Difference (CFDs) and foreign exchange (forex) carries a high level of risk and may not be suitable for all investors. It is important to fully understand the risks involved and seek independent financial advice if necessary.