The EUR/USD currency pair traded relatively quietly throughout Tuesday—at least until the publication of the annual Nonfarm Payrolls report. However, as we've said many times, one report (no matter what it is) cannot reverse the trend or instantly change trader sentiment. That's why in our fundamental articles, we won't even discuss the NonFarm Payrolls report; we'll cover it in the "Trading Recommendations" section. After a three-week pause, the US dollar is falling again. As we warned several times over these last three weeks, the dollar had—and still has—no factors for growth. If anything, quite the opposite. In these three weeks, enough news arrived essentially "instructing" the market to keep dumping the US currency. This includes failed macroeconomic statistics in the US, Donald Trump's "firing" of Lisa Cook, and the raising of tariffs against India in retaliation for their refusal to stop buying Russian oil, gas, and arms. As we can see, the trade war is only escalating, with Trump now using tariffs as leverage against certain countries to achieve his own geopolitical goals, while still demanding the Fed cut rates. Therefore, all the factors that pushed the dollar down in the first 7–8 months of 2025 remain in force. But beyond those, there are new ones as well. For example, starting in September, the gap between ECB and Fed rates will begin to narrow—and we expect it to narrow quickly. In theory, the euro shouldn't have risen so much in the first half of the year, since the ECB was cutting rates that whole time. Imagine how powerful Trump's impact on the dollar was, that even as the ECB was easing, the euro still rose! In the second half, the Fed will be the one cutting rates. So what should we expect from the dollar if it fell even when the Fed kept hawkish policy settings?
Analysis are provided by InstaForex.
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