USD Wavers Amid Policy Turbulence: Is the Global FX Market Shifting Gears?

Forex Market Update | April 18, 2025

Forex Weekly Insight: USD Faces Pressure as Global Policy Diverges

April 18, 2025 – Global forex markets entered a volatile phase this week, driven by diverging monetary policies, renewed trade tension fears, and political uncertainty in the U.S.

1. Macroeconomic Backdrop

The U.S. dollar weakened against major currencies after comments from Fed Chair Jerome Powell, who maintained a cautious tone regarding future rate cuts. While inflation remains sticky, the Fed signaled patience, despite increasing pressure from former President Donald Trump.

Meanwhile, the European Central Bank (ECB) surprised markets with its seventh rate cut this year, but the euro rose regardless, as markets anticipate policy stabilization in the eurozone.

Trump’s threats of steep tariffs on Chinese and Taiwanese goods reignited fears of a trade war, pushing investors toward safe-haven assets like the Japanese yen.

2. Major Currency Pairs: Weekly Trends

3. Market Sentiment & Forecast

USD: Weakening bias may persist if U.S. political tensions escalate or data disappoints.

EUR: Could continue upward momentum toward 1.095 if USD remains soft.

JPY: Demand likely to rise if geopolitical or trade risks deepen.

GBP: Holding gains; watch for UK CPI and BoE commentary next week.

AUD: Bearish sentiment in short term; China stimulus could change the tone.

4. Key Events to Watch Next Week

US GDP (Q1 preliminary) – April 25

Eurozone PMI Flash – April 23

BoJ Rate Decision – April 26

US PCE Inflation Data – April 26

Bottom Line

As markets digest policy divergences and renewed global risks, volatility is set to stay. Traders and investors should monitor central bank cues, Trump’s trade rhetoric, and risk appetite dynamics closely. Short-term sentiment favors safe-havens and select high-beta currencies depending on region-specific drivers.

Infofinance.com