Donald Trump promised America a new Golden Age. However, in 2025, US economic growth slowed from 2.4% to 2.2%, notching the worst result since 2022 thanks to Trump’s sweeping tariffs. Let’s discuss this topic and make a trading plan for the EUR/USD pair.
The article covers the following subjects:
Major Takeaways
- The US administration has introduced new 10% tariffs.
- The derivatives market anticipates a rate cut by the Federal Reserve in 2027.
- The euro is sensitive to the conflict in the Middle East.
- Short trades on the EUR/USD pair can be opened on a breakout of 1.1785 and 1.1766.
Weekly US Dollar Fundamental Forecast
Turmoil does not last forever. Markets are gradually recovering from the shock caused by the Supreme Court’s decision to cancel tariffs. The US administration has introduced new 10% import duties. Donald Trump is threatening to make them even higher, and the US government has launched numerous investigations to make these duties permanent. However, if the global economy survived America’s Liberation Day, why shouldn’t it be able to cope with a lesser threat?
According to Bloomberg, the average effective tariff rate will fall from 13.6% to 10.2%, easing pressure on American consumers. According to research by the Federal Reserve Bank of New York, up to 90% of tariffs are covered by consumers.
US Tariff Rates
Source: Bloomberg.
Due to the shutdown and import tariffs, the US economy slowed from 2.4% to 2.2% in 2025, posting the worst figure since 2022. It hardly points to the new Golden Age of America promised by Donald Trump. If it weren’t for productivity gains thanks to AI and the huge investments associated with it, it would be even worse.
However, are new technologies a bullish or bearish factor for the economy? Could AI be so bullish that it ultimately turns out to be bearish? According to FOMC Governor Lisa Cook, the Fed is unable to counteract the impact of AI on the labor market. Mass layoffs due to productivity growth could ultimately lead to a recession. History shows that downturns follow serious spikes in unemployment.
Against this backdrop, the futures market has changed its view on the Fed’s monetary policy path. Whereas the market previously predicted a rate hike in 2027, it now believes that monetary expansion will continue.
Market Expectations for Fed Interest Rate
Source: Bloomberg.
If this continues, the upward trend in the EUR/USD pair may resume in a couple of weeks. However, the euro is currently under pressure and continues to react to external factors.
ING believes that every $5 increase in the price of Brent crude leads to a 1% weakening of the main currency pair. If the armed conflict in the Middle East pushes North Sea crude oil to $85 and above, EUR/USD quotes will return to 1.14.
The US dollar is supported by hawkish comments from Chicago Fed President Austan Goolsbee and Boston Fed President Susan Collins, who point to the need to keep the federal funds rate at its current high level for an extended period.
Weekly EURUSD Trading Plan
How quickly will the correction on the EUR/USD pair end? Should we expect the pair to slide to 1.17 and below? Alternatively, is it time to start building long-term long positions? The US dollar is looking strong at the moment. Therefore, if the euro falls below 1.1785 and 1.1765, it will be a sound opportunity to sell the single currency.
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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