Forex Analysis & Reviews: 27.05.2025 - The Dollar Is in Panic

Live Chat

InstaForex - Official partner of Dragon Racing

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex - Official partner of Dragon Racing

27.05.2025 12:23 AM

The Dollar Is in Panic

Everything has become tangled in the international currency market. A few months ago, doubts among Federal Reserve officials about the need to resume monetary easing in September—coupled with confidence from their European Central Bank counterparts in imminent rate cuts—would have sunk EUR/USD. Yet, as spring comes to a close, the euro is confidently heading north. Donald Trump's restructuring of the international trade system affects everyone in the Forex market.

According to Minneapolis Fed President Neel Kashkari, anything is possible. The FOMC official is uncertain whether the federal funds rate will be cut in September. It all depends, he says, on whether the U.S. has concluded trade negotiations with other countries by then. That clarity will determine whether the Fed should ease policy. In contrast, Bank of Lithuania Governor Gediminas Simkus sees ample opportunity for a deposit rate cut at the ECB's next meeting.

Monetary policy divergence, the resulting rise in Treasury yields, and the widening yield spread with European bonds served the EUR/USD bears well in 2022–2024. Today, however, speculators are actively selling off everything related to America, including the dollar.

Dynamics of Hedge Fund and Asset Manager Positions in the U.S. Dollar

I believe this situation is primarily driven by fear. The idea is that inflationary pressures will prevent the Fed from lowering borrowing costs. In the end, the economy won't be able to withstand such high rates and will plunge into recession. Moreover, the White House's aggressive fiscal stimulus will require a new wave of large-scale Treasury bond issuance — and there may not be enough buyers. Yields will climb across the curve, potentially knocking the U.S. economy off its feet.

The eurozone, meanwhile, is seeing the opposite situation. Yes, trade wars — due to the EU's substantial trade surplus with the U.S. — will hurt German exporters and others across the continent. But the ECB will do everything possible to ease that pain. Monetary expansion will be deployed, and the markets welcome this. A combination of ECB policy easing and German fiscal stimulus could help support the struggling eurozone.

Dynamics of the U.S. Trade with the European Union

Old beliefs are being challenged in the Forex market, and traders must be adaptable and quick learners to navigate the turbulent waters of international currency trading. I believe the declining trust in the U.S. dollar is significant and likely to endure for quite some time. Officials from the ECB seem to agree, as they think this loss of confidence in the dollar will enhance the euro's appeal.

Technically, on the daily EUR/USD chart, there is an intense battle for the upper boundary of the fair value range between 1.12 and 1.1395. A defeat for the bulls would allow a pin bar to form. A victory would provide a basis to add to long positions opened at 1.1225 and 1.1285.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.