The US Takes It All, Gives Nothing Back. Forecast as of 30.07.2025
Lower-than-expected tariffs allow the IMF and Goldman Sachs to raise their eurozone GDP forecasts. However, the growth divergence between the US and the currency bloc will continue to widen. What does this mean for EUR/USD? Let’s discuss it and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The US has won the trade war.
- Goldman Sachs raised its eurozone GDP forecast.
- The IMF sees global economic growth at 2.7%.
- EUR/USD short positions targeting 1.149 and 1.1325 remain relevant.
Weekly Fundamental Forecast for Dollar
Winners aren’t judged. Donald Trump scored a victory. He raised tariffs beyond the levels of the infamous Smoot–Hawley Tariff Act of 1930, but avoided a full-blown trade war. The US will impose an effective tariff rate of 15% and receive $1.15 trillion in investments from Japan and the EU. Europe also agreed to buy US military and energy goods. And what will Washington give in return? Nothing! No wonder EUR/USD bears are having a feast.
Investor focus has shifted from trade uncertainty to American exceptionalism. It was this factor that helped US stock indices grow by more than 20% year over year in 2023–2024 and supported the greenback against major global currencies. The question now is whether Europe can recover from the blow.
Goldman Sachs thinks it can. The bank raised its 2025 eurozone GDP forecast from 1% to 1.1% and the 2026 forecast from 1.1% to 1.2%, citing lower-than-expected tariffs. It now believes import tariffs will trim just 0.4 points off GDP by year-end, rather than 0.6.
Goldman Sachs Eurozone Forecasts
Source: Wall Street Journal.
The IMF is also optimistic. It expects global GDP growth in 2025 to reach 2.7%, up from the 2.4% projected in April. If US tariffs rise to the levels announced on America’s “Liberation Day”, global output would lose 0.2 percentage points. The economies of the United States, China, and the eurozone are expected to grow by 1.7%, 3.8%, and 0.7%, respectively.
IMF Growth Forecasts for Major Economies
Source: Wall Street Journal.
The IMF is leaving itself room to retreat — and for good reason. Donald Trump managed to avoid a trade war, but it’s unclear how long peace will last. The US and China seem to have agreed to extend the current ceasefire in trade tensions, but the final word will come from the White House. According to Scott Bessent, without a deal, tariffs could rise by 34% and reach 80–85%. The Treasury Secretary noted that if the EU fails to fulfill its obligations on investment and energy purchases, the 15% import duty may increase.
Widening divergence in economic growth and a reversal of capital flows point to a deeper EUR/USD correction or even a trend reversal. Following strong external trade data, the leading indicator from the Atlanta Fed points to 2.9% GDP growth in the US for Q2. The Fed has no plans to cut rates, despite the deepest internal division at the FOMC since 1993. If the US labor market doesn’t fall off a cliff, the dollar will likely continue to strengthen.
Weekly Trading Plan for EUR/USD
Selling EUR/USD on the rally toward 1.18 and adding to positions on the breakout at 1.173 allowed traders to build successful shorts near the top of the uptrend. These trades should be held and gradually built up. The initial targets are at 1.149 and 1.1325.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of EURUSD in real time mode
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