Loss of confidence in dollar will drive EURUSD to 1.115

The EURUSD currency pair began recovering yesterday after a sharp pullback from its 2025 highs set last week. The upward movement gained momentum at Wednesday's market open. Bulls are now pushing to quickly reclaim recent highs and reach the 1.1150 level for the first time since late September. Given the current news context, a breakout above this key level before the end of the current week looks possible.

US tariff onslaught has taken another dramatic turn as Beijing showed no willingness to engage in negotiations. In response, President Trump slapped massive 104% tariffs on Chinese imports—a move that threatens to derail global economic growth. According to a new CNBC survey, 37% of US CEOs are now bracing for job cuts, with the unemployment rate expected to rise from 4.2% to 4.7% by the end of 2025.

Traditionally, periods of heightened uncertainty boost demand for the dollar, but not this time. Wells Fargo analysts attribute this divergence to expectations of aggressive Fed rate cuts. Market consensus is now pricing in five monetary easing moves this year, forcing the American regulator to choose between propping up a faltering economy and taming inflation. Central banks nearly always opt for the former.

Reuters reports traders are rotating out of the dollar into alternative safe havens, with particularly strong inflows into the Japanese yen and Swiss franc. Even the euro—long out of favor with investors—is now seen as a more attractive option than the US currency. All these factors are pushing EURUSD toward further growth.

The late March correction in EURUSD successfully relieved overbought conditions on the RSI indicator, removing technical barriers to further gains. The immediate upside target now stands at 1.1150.

Consider the following trading strategy:

Buy EURUSD in the range of 1.1–1.105. Take profit – 1.115. Stop loss – 1.09.