Last week, the Federal Reserve kept interest rates unchanged and reiterated plans for two 25-basis-point rate cuts by the end of 2025. Fed Chair Jerome Powell noted that recent trade measures—particularly the new reciprocal tariffs taking effect on April 2, such as additional tariffs on steel and aluminum (on top of the existing 25% imposed in February)—could slow economic growth.
Beyond trade policy, global geopolitical tensions have increased demand for the USD. Escalating drone attacks between Russia and Ukraine and renewed military activity in the Middle East have heightened market uncertainty, further driving safe-haven demand for the dollar.
Last week, the DXY stabilized and rebounded near the 102.80 level. However, despite the weekly green candle, overall bearish momentum remains dominant. This week, focus remains on the key resistance level at 104.36:
• If DXY trades below 104.36, monitor support at 102.80, 101.85, and 100.53, with 102.80 being a crucial level—a break below may signal a continuation of the downtrend.
• If DXY holds above 102.80 and breaks above 104.36, this could open further upside potential, with 105.56 and 107.40 as the next resistance zones.
EUR/USD
The US and European economies have shown a notable reversal in dynamics. Once considered weak, Europe is now showing signs of recovery, supported by low inflation and interest rate cuts. European equity markets are performing strongly. The ECB has already cut rates twice, and European leaders have taken active steps to combat stagnation—such as Germany amending its “debt brake” to boost defense and infrastructure spending, and the EU proposing a €150 billion defense fund.
Last week, EUR/USD faced resistance around 1.0940, forming a bearish engulfing pattern, indicating strong selling pressure at that level.
• For bulls to open further upside, EUR/USD must break and hold above 1.0940. This remains the key pivot level to watch this week.
• If EUR/USD trades below 1.0940, monitor pullback levels at 1.0778 and 1.0632 for support.
• If the pair reclaims and holds above 1.0940, it could target 1.1143 and 1.1484 as the next resistance levels.
USD/JPY
Japan’s February CPI rose 3.7% YoY, down from 4% in January, suggesting that while inflation remains above the BoJ’s 2% target, it is starting to ease.
At the same time, Japanese companies have largely agreed to strong wage hike demands from unions for a third straight year, which could boost consumer spending and sustain inflationary pressure.
Last week, USD/JPY surged then pulled back, closing near the critical 149.24 level, reflecting a fierce battle between bulls and bears at this strategic point. This week’s focus remains on 149.24:
• If bears push USD/JPY below 149.24, watch for support at 146.44 and 144.01. A break below 146.44 could trigger a deeper correction.
• If USD/JPY holds above 149.24, the pair could seek further gains, targeting resistance at 152.05 and 156.00.