empty
21.01.2025 12:40 AM
EUR/USD: The Illusion Bubble – Dollar Weakens Amid Strengthened Risk Sentiment

Markets are optimistic ahead of Donald Trump's inauguration. Increased risk appetite has allowed EUR/USD buyers to recover from Friday's lows, with the pair now trading above the 1.0300 target and even testing the 1.04 level. However, there are no specific drivers to support an upward trend: Monday's economic calendar was nearly empty. Germany's Producer Price Index (PPI) was released during the European session, coming in weaker than expected (-0.1% m/m and 0.8% y/y), but traders largely ignored the report.

Looking ahead, despite EUR/USD's confident growth, opening positions on the pair remain highly risky. Given the unpredictability surrounding the 47th U.S. president, both long and short positions appear equally unreliable.

This image is no longer relevant

In my opinion, U.S. media insiders have overly "sugarcoated" Trump's presidency. Remember the market's reaction to his victory in November—panic was rampant among traders, leading to widespread fear and uncertainty. At that time, the U.S. dollar strengthened as a safe-haven asset.

Now, the situation seems almost the opposite. Markets are exhibiting irrational optimism, and the dollar is facing downward pressure. The U.S. Dollar Index struggled to maintain its position above the 109 level and is currently trending downward.

The question arises: did one version of Trump win the election (a trade-war instigator and protectionist), while another version (a diplomat) is entering the Oval Office today? Or is this merely a collective illusion fueled by media insiders?

While we can only speculate, it appears that traders are placing excessive hope in Trump's diplomatic approach, overlooking his leadership style during his first term. Trump is, above all, a seasoned businessman who often applied business tactics to politics. For instance, in 2019, just a week before key trade talks with China, he raised tariffs on $237 billion worth of Chinese goods, using the tariffs as a bargaining chip with Xi Jinping.

Such tactics are likely to define his second term, potentially with an even broader geographic focus. Does anyone in the market genuinely believe that the Republican has abandoned his idea of imposing 10% tariffs on all U.S. imports and 60% tariffs on Chinese goods?

Today marks a significant moment. Last fall, Trump promised to sign an executive order to raise tariffs on imports from Canada, Mexico, and China "immediately after the inauguration," which was to be on his first day as president. In addition, he also committed to introducing an additional tariff rate specifically on Chinese products.

According to a report from the Wall Street Journal, President Donald Trump will not sign any "tariff orders" immediately following his inauguration. Instead, this issue has been postponed for further discussion. This decision may be linked to an insider report stating that Trump could visit China within the first 100 days of his presidency. Among the many executive orders he plans to issue—cancelling numerous actions and policies from the Biden administration in areas like illegal immigration, diversity and inclusion, and climate regulations—there reportedly will be no tariff-related orders. Moreover, Reuters has indicated that Trump will not announce any tariffs on his first day in office. Sources suggest that he will first direct his agencies to investigate the nature of trade deficits and the unfair trade and currency practices of other countries. Based on their findings, appropriate response measures will then be considered.

Similarly, Bloomberg insiders claim the new administration is considering a gradual, "gentler" tariff increase approach.

As a result, previous concerns during Trump's presidency have unexpectedly shifted to a sense of optimism. This change has led to an increased appetite for risk assets, while the safe-haven dollar has faced significant pressure.

However, maintaining long positions on the EUR/USD remains highly risky. Trump's "peaceful" stance could change quickly if China refuses to meet U.S. demands. The absence of tariffs on Day One does not eliminate the possibility of their introduction on Day 20 or Day 100. Furthermore, even without executive orders, Trump could escalate his rhetoric to a more ultimatum-like tone.

Therefore, despite the recent growth in the EUR/USD pair, a wait-and-see approach is advisable. If Trump switches from "peace to fury," even if only in his rhetoric, the fragile narrative of "peaceful" relations could collapse suddenly. In such a scenario, the dollar would likely see renewed demand, driven by a surge in risk aversion across the market.

Seleccione el marco de tiempo
5
min
15
min
30
min
1
hora
4
horas
1
día
1
s.
Gana con los cambios en el valor de las criptomonedas con InstaForex.
Descarga MetaTrader 4 y abre tu primera operación.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    UNIRSE AL CONCURSO

Recommended Stories

USD/JPY. La inflación en Tokio se acelera, pero el yen sigue siendo vulnerable

El informe publicado hoy sobre el crecimiento de la inflación en la capital de Japón resultó estar en la "zona verde". La publicación permitió a los vendedores del par usd/jpy

Irina Manzenko 12:25 2025-03-28 UTC+2

Análisis del par GBP/USD. El 28 de marzo. La libra no tuvo tiempo de caer, pero volvió a subir.

El par de divisas GBP/USD volvió a cotizarse al alza el jueves, aunque hace unos días comenzó una especie de corrección bajista. El mercado incluso reaccionó a un informe débil

Paolo Greco 07:24 2025-03-28 UTC+2

Análisis del par EUR/USD. 28 de marzo. A Donald Trump le gusta hacer sorpresas.

El par de divisas EUR/USD mantuvo una inclinación bajista durante el jueves, pero se negoció al alza durante el día. La volatilidad volvió a ser baja, lo que indica

Paolo Greco 07:24 2025-03-28 UTC+2

USD/JPY. El yen se devalua a la espera del informe sobre el crecimiento del TCPI

El par usd/jpy mantiene el potencial de un mayor crecimiento. El informe sobre el crecimiento del TCPI, que se publicará el viernes, o bien reforzará la tendencia alcista, o provocará

Irina Manzenko 12:13 2025-03-27 UTC+2

Donald Trump volvió a confundir a todos

Ayer, el presidente de EE.UU., Donald Trump, declaró que planea una serie de excepciones a su amplia propuesta de aranceles, lo que se convirtió en la última insinuación velada sobre

Jakub Novak 08:45 2025-03-26 UTC+2

El jefe del Banco de Inglaterra contra los aranceles y a favor del desarrollo de la IA

La intervención de ayer del gobernador del Banco de Inglaterra, Andrew Bailey, solo abordó parcialmente la economía del Reino Unido y sus perspectivas. Hablando durante una conferencia en la Universidad

Jakub Novak 08:17 2025-03-25 UTC+2

GBP/USD. Una semana importante para la libra

La libra espera acontecimientos importantes y significativos. El miércoles se publicará el informe clave sobre el crecimiento de la inflación en el Reino Unido, así como la intervención

Irina Manzenko 12:22 2025-03-24 UTC+2

El ataque a la estación de medición de gas Sudzha solo provocó un aumento temporal de los precios

Los precios del gas natural en Europa registraron un fuerte repunte debido a un ataque contra una estación de bombeo inactiva en la región de Kursk, Rusia. Según

Miroslaw Bawulski 10:29 2025-03-24 UTC+2

Los mercados atrapados en un círculo vicioso sin salida por ahora (posible caída del Bitcoin y del precio del oro)

Los mercados están en estado de confusión debido a la enorme cantidad de noticias negativas que se ciernen sobre ellos sin un final claro a la vista. En este contexto

Pati Gani 11:13 2025-03-20 UTC+2

Análisis del par GBP/USD. El 17 de marzo. El mercado se ha dormido, la economía no le interesa a nadie.

El par de divisas GBP/USD el viernes "murió" definitivamente. En la ilustración a continuación se puede ver claramente que la volatilidad fue bastante alta en los primeros tres días

Paolo Greco 07:03 2025-03-17 UTC+2
¿No puede hablar ahora mismo?
Ingrese su pregunta en el chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.