Greenback Slides After US Closes Trade Deals. Forecast as of 23.07.2025
Initially, it seemed that everything was unfolding according to Donald Trump’s strategic vision. Negotiations are successful, and trading partners agree to pay for the big and beautiful store called the US economy. However, the reality is different. Let’s discuss this topic and make a trading plan for the EURUSD pair.
The article covers the following subjects:
Major Takeaways
- The US signed agreements with Indonesia, the Philippines, and Japan.
- The IMF believes that trade imbalances cannot be eliminated.
- The US dollar is acting as a safe-haven asset.
- Short trades can be considered if the EURUSD pair fails to exceed 1.18.
Weekly US Dollar Fundamental Forecast
Donald Trump’s tactic of negotiating at gunpoint is working. The US administration issued a tariff threat to Indonesia, the Philippines, and Japan, and these countries agreed to lower tariffs in response. However, they remain significant. The US will impose a 19% import duty on the first two countries and 15% on Japan. Furthermore, Tokyo will have to invest $550 billion in the US economy, with 90% of the profits from this investment going to Washington.
Donald Trump’s primary role is that of an entrepreneur, with his presidential duties taking a secondary position. He is a dealmaker, which is why the global economy is turning into one big trade agreement to eliminate international trade imbalances. According to the IMF, this scenario is not feasible. As the US, China, and the eurozone implement economic stimulus measures, current account surpluses are reaching their highest levels in a decade.
Global Balances as Share of GDP
Source: Bloomberg.
According to the IMF, the implementation of tariffs by President Donald Trump is expected to harm both investment and savings, with minimal effect on current account balances. In other words, the US president’s efforts are ultimately unsuccessful. However, the financial markets currently have a different outlook.
Despite the tense and uncertain nature of the negotiations, the talks have already yielded notable results. For instance, countries have agreed to high tariffs, which will increase US budget revenues. In theory, the US economy should be thriving, which is usually accompanied by a stronger dollar. However, the recent rally in the EURUSD pair suggests otherwise.
The key issue is determining the payer of the tariffs. According to research by Deutsche Bank, it is the Americans. General Motors has opted to maintain its pricing strategy rather than raising car prices, opting instead to reduce corporate profits. Competitors are following suit, which is a key factor in curbing inflation. However, it is evident that this situation cannot persist indefinitely. The coexistence of high prices and a slowing economy is often defined as stagflation. The likelihood of its arrival in the United States is increasing, which is driving the EURUSD pair higher.
Currently, Donald Trump is enjoying a significant rise in his international standing, as evidenced by the increasing number of countries entering into trade agreements with the US. However, it is a short step from greatness to ridicule. A decline in corporate profits could cause the S&P 500 index to collapse, and the Fed’s decision to maintain interest rates could potentially strengthen the US dollar. These developments do not appear to align with the plans of the US administration, which has expressed confidence in the imminent attainment of victory. However, history is replete with examples of battles won but wars lost.
Weekly EURUSD Trading Plan
Despite the policies of Donald Trump, the US dollar has maintained its status as a safe-haven currency. It continues to decline when US stock indices rise. In this connection, the correction in the S&P 500 index will enable bears to push the EURUSD pair lower. The euro’s inability to surpass 1.18 or consolidate above 1.1715 may prompt traders to lock in profits on long trades formed at 1.164 and create an opportunity to open short trades on a reversal.
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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