empty
23.05.2025 08:15 AM
EUR/USD Overview – May 23: The Rebellion Against the Dollar Continues

This image is no longer relevant

The EUR/USD currency pair traded relatively calmly on Thursday, yet it has risen significantly over the past two weeks. This movement can be interpreted in several ways. From a technical perspective, the uptrend remains intact, and after a correction, the bullish trend was expected to resume. From a fundamental standpoint, the market reacted to a U.S. credit rating downgrade, a controversial "tax cut" bill this week, and continued expectations of a slowdown in the U.S. economy. Additionally, there are no signs of trade negotiations between the U.S., the EU, and China. Combined, these factors likely triggered another wave of U.S. dollar selling.

Nevertheless, this week's macroeconomic calendar has been almost empty, which may have led some traders to feel there were no clear reasons for the dollar's decline. However, there are underlying reasons — just not immediately evident.

The PMI indices published yesterday will not be discussed in detail. It is enough to say that all readings in the Eurozone—including Germany—came in weaker and are now below the 50.0 mark, indicating contraction. Still, the euro only experienced a modest drop of 30–40 pips in the first half of the day. As previously warned, such reports can trigger a local reaction but are unlikely to shift trader sentiment to bearish or reverse the trend.

The European economy has been struggling for a long time, and Trump's tariffs only further weaken its outlook. The European Central Bank is doing everything it can to avoid a GDP contraction, but at best it can only prevent further deterioration, not stimulate growth. Yet, these facts do not directly influence the euro-dollar exchange rate. We've said it repeatedly — if not for Donald Trump, the euro would likely be near parity with the dollar. Even now, comparing the state of the European and U.S. economies or the monetary policies of the ECB and the Federal Reserve, it's clear that the dollar should not be falling.

Nonetheless, the market continues to sell off the U.S. currency, which resembles a personal protest against Trump. Foreign investors are increasingly opting for assets other than U.S. stocks and bonds. While domestic demand may cover the shortfall in foreign capital, the U.S. economy is becoming less attractive to foreign investors. So, even if U.S. domestic markets have recovered from the "initial shock," the global perception of the dollar, the U.S. economy, and its government have shifted significantly.

Therefore, considering all relevant factors (as one should), there are no real reasons for the dollar to fall. However, when viewing the situation realistically, the market continues to rebel against both the dollar and Trump.

This image is no longer relevant

The average volatility of EUR/USD over the last five trading days as of May 23 is 87 pips, which is categorized as "moderate." We expect the pair to trade between 1.1195 and 1.1369 on Friday. The long-term regression channel is pointing upward, still indicating a bullish trend. The CCI indicator entered oversold territory, which — within an uptrend — suggests a trend resumption. Shortly after, a bullish divergence formed, triggering another wave of upward movement.

Nearest Support Levels:

S1: 1.1230

S2: 1.1108

S3: 1.0986

Nearest Resistance Levels:

R1: 1.1353

R2: 1.1475

R3: 1.1597

Trading Recommendations:

The EUR/USD pair is attempting to resume its upward trend. In recent months, we have consistently stated that we expect only a decline in the euro in the medium term, and as of now, nothing has changed. The dollar still has no fundamental reason to weaken, except for Trump's policies. The U.S. President has recently been leaning toward a trade truce, so the trade war factor may now support the U.S. currency. However, we continue to observe a complete reluctance from the market to buy the dollar, which appears to be a protest directed personally at Trump. Short positions remain relevant if the price is below the moving average, with targets at 1.1108 and 1.0986. If the price is above the moving average, long positions may be considered with targets at 1.1353 and 1.1369.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Stanislav Polyanskiy
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

On Tuesday, gold is pulling back from the round $3400 level, which acted as resistance. However, in the lead-up to the August 1 deadline for the introduction of new tariffs

Irina Yanina 12:08 2025-07-22 UTC+2

Trump Continues Seeking Ways to Pressure China Through Other Countries

According to media reports, President Donald Trump's ongoing efforts to pressure China via its supply chain trading partners threaten to undermine the country's growth and much of its exports

Jakub Novak 10:30 2025-07-22 UTC+2

The European Union Takes on China

While the euro is gradually recovering after a major sell-off observed for most of this month, recent data shows that the latest round of EU sanctions has targeted a number

Jakub Novak 10:24 2025-07-22 UTC+2

The Closer We Get to August 1, the More Tense Market Conditions Become (Potential Decline in #USDX and USD/JPY Pair)

As August 1 approaches—the date previously announced by Donald Trump for the imposition of tariffs against U.S. trading partners—market participants are becoming increasingly focused on this issue, exercising caution

Pati Gani 10:14 2025-07-22 UTC+2

Market braces for 'Zombie Liberation Day'

Despite the looming August 1 deadline, when the White House's sweeping import tariffs are set to take effect, the S&P 500 keeps hitting new record highs. Step by step

Marek Petkovich 09:10 2025-07-22 UTC+2

What to Pay Attention to on July 22? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic reports scheduled for Tuesday. Therefore, weak market movements can be expected throughout the day. Of course, Donald Trump may at any moment retake center stage with

Paolo Greco 07:20 2025-07-22 UTC+2

GBP/USD Overview – July 22: American-Style Business in All Its Glory

The GBP/USD currency pair also traded higher on Monday, despite the absence of any local drivers. Let us recall that no fundamental or macroeconomic event was scheduled on the first

Paolo Greco 03:45 2025-07-22 UTC+2

EUR/USD Overview – July 22: The Dollar Has No Prospects

The EUR/USD currency pair traded higher throughout Monday. The rise in quotes began early in the morning and persisted for most of the day. Despite the lack of fundamental

Paolo Greco 03:45 2025-07-22 UTC+2

Trump Raises the Stakes in the Fight with the EU

The new week had barely begun when the dollar faced fresh reasons for decline. Over the past two weeks, there have been plenty of such reasons, but the market persisted

Chin Zhao 00:43 2025-07-22 UTC+2

EUR/USD: Bloomberg Leaks and Lutnick's Statements. Trade Talks in Focus

Last week, the euro-dollar pair traded within the range of 1.1560–1.1650, repeatedly testing the boundaries of this corridor. On Friday, traders attempted to consolidate above the 1.1650 resistance level

Irina Manzenko 00:42 2025-07-22 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.