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Eurusd-3

HelenP. I Euro will decline to support zone, breaking trend lineHi folks today I'm prepared for you Euro analytics. After breaking out from a long consolidation phase, the Euro entered a strong upward trend supported by a clearly defined trend line. This breakout was backed by strong momentum, allowing the price to push above Support 1 and climb rapidly. However, after reaching the 1.1450 area, bullish strength started fading. The market printed a sharp rejection from the highs, and soon after, the price broke back below the trend line. This breakdown signals a shift in sentiment. The price is now approaching the previous support zone between 1.1160 and 1.1120 points, which acted as a key accumulation area during the bullish move. The reaction from this zone will be crucial, but considering the breakdown from the trend line and the aggressive rejection from the top, sellers now appear to be in control. Currently, EUR is trading below the broken trend line, and bearish pressure continues to build. Given the rejection from higher levels, structure break, and weak recovery attempts, I expect EURUSD to decline toward my current goal at 1.1160 points. If you like my analytics you may support me with your like/comment ❤️
Short
by FirstNameHelen
6
EURUSD POSSIBLE TRADE SETUPPotential Trade Setup on EURUSD EURUSD is on a strong 3-week rally correction that was almost got rejected on Friday due to the UK and US GDP data that came pretty strong and weak respectively. That said, I am still quite anticipating for a possible correction to continue towards the 50% fib level at 1.0650, before we can start looking for a possible buy entry in the long term. Trading Plan: 1. BUY if the resistance gets broken and retest successfully. 2. SELL if the current region acts as resistance for rejection towards the downside with an engulfing called on the 4H chart. Targets: 1. Can be 1:2 for either entries. Tips: 1. The RSI (1d) indicates an Overbought but easing gradually towards the 50 level. Please like, follow, and comment!! You may find more details in the chart! Thank you and Trade Responsibly! ❤️PS: Please support with a like or comment if you find this analysis useful for your trading day❤️
Short
by Adefxc
2
EURO - Price can make correction and then continue to move upHi guys, this is my overview for EURUSD, feel free to check it and write your feedback in comments👊 Some days ago price broke resistance and started a strong upward impulse, exiting from a flat accumulation zone. After this breakout, the Euro made a sharp rise and formed a rising wedge pattern. Then price reached the upper boundary of a wedge and bounced down, testing the support line of the pattern. Recently, it touched the support zone near the $1.0800 level and then bounced with recovery toward resistance. Now price trades inside wedge, holding above support line and forming bullish continuation structure. In my opinion, Euro can continue to grow and reach $1.1185 resistance line of the wedge soon. If this post is useful to you, you can support me with like/boost and advice in comments❤️
Long
by WalterMoon
10
DXY Drops to 3-Year Lows, EURUSD Soars to 1.14With the 3-Day RSI hovering near 2020 highs, the monthly chart shows potential for further upside as EURUSD breaks out of a long-term downtrend channel that began from the 2008 highs. The pair has reached a high of 1.1470, aligning with the 0.272 Fibonacci retracement of the 2008–2022 downtrend. A sustained hold above 1.15 opens the door for further gains toward resistance levels at 1.1730, 1.20, and 1.2350. On the downside, if overbought conditions on lower time frames lead to a pullback below 1.1270, potential support levels to monitor include 1.1140, 1.1070,1.09, and 1.0850, - Razan Hilal, CMT
by FOREXcom
1
GBP/USD Resistance Test: Will the Pound Maintain its Strength?📊 GBP/USD Daily Technical Outlook – April 11, 2025 Overview The GBP/USD pair saw a notable rally on Friday, opening at 1.2970, reaching a high of 1.3046, and a low of 1.2967, before closing at 1.3007. This upward movement reflects the continuation of the bullish trend from earlier in the week, supported by positive economic data from the UK and a weakening U.S. dollar. The pair is currently moving in a strong bullish phase, with the market eyeing higher resistance levels. 📈 Current Market Structure After a period of consolidation, the pair broke above key resistance levels, signaling strong buying momentum. This move follows positive GDP data from the UK, which showed a 0.5% growth in February 2025, the highest growth in 11 months. 🔹 Key Resistance Levels: 1.3046: The highest point of April 11, 2025. This is immediate resistance, and a break above it could lead to further upside. 1.3100: Psychological resistance level. A break above this could extend the rally further. 1.3200: A major resistance area, which could be a target for buyers if the bullish trend continues. 🔸 Key Support Levels: 1.2967: The low for the day, which acts as immediate support. A stay above this level reinforces the bullish outlook. 1.2900: A significant support level. A break below this could signal a short-term pullback. 1.2820: Strong support, marking the bottom of the previous price range. 📐 Price Action Patterns: The strong bullish candles in recent days indicate dominance by buyers. The breakout above previous resistance levels and the formation of higher highs support the continuation of the uptrend. However, traders should keep an eye on potential reversal patterns as the price approaches resistance. 🧭 Potential Scenarios: ✅ Bullish Scenario: If GBP/USD holds above 1.3046, the next targets could be 1.3100 and potentially 1.3200, driven by strong momentum from positive UK data and a weakening dollar. ❌ Bearish Scenario: If GBP/USD fails to sustain above 1.2967, a pullback to 1.2900 could occur. A break below this level could lead to further declines towards 1.2820. 📌 Conclusion: GBP/USD is showing strong bullish momentum, supported by positive economic data from the UK and a weakening U.S. dollar. A sustained break above resistance levels could open the door for further gains. Traders should watch for potential pullbacks at key support levels and monitor economic developments closely. Note: This analysis is based on data available up to April 11, 2025. Always monitor the latest developments and apply appropriate risk management when trading.
Long
by Saeed966
8
Massive Breakout in EUR/USD – Time to Ride the Trend?📊 EUR/USD Daily Technical Outlook – April 11, 2025 The euro-dollar pair (EUR/USD) continued its upward momentum on Friday, reaching a high of $1.1473 before closing at $1.1352. This movement reflects a significant appreciation of the euro, influenced by a weakening U.S. dollar amid escalating trade tensions and a selloff in U.S. Treasuries. 📈 Current Market Structure: After consolidating earlier in the week, EUR/USD broke above key resistance levels, indicating strong bullish sentiment. The pair's movement suggests a potential shift in market dynamics, with investors seeking alternatives to the dollar. 🔹 Key Resistance Levels: $1.1473: Immediate resistance. A break above this level could signal further bullish continuation. $1.1500: Psychological resistance and a potential target for bulls. $1.1600: A more substantial resistance area that could be tested if momentum continues. 🔸 Key Support Levels: $1.1300: Recent support. A break below this level could indicate a short-term pullback. $1.1200: Next significant support, representing a potential bounce point. $1.1100: A critical support level that, if breached, could lead to a shift in market sentiment. 📐 Price Action Patterns: The pair's recent breakout above previous resistance levels suggests a strong bullish trend. The formation of higher highs and higher lows supports this view. However, traders should watch for potential reversal patterns near resistance areas. 🧭 Potential Scenarios: ✅ Bullish Scenario: If EUR/USD breaks and holds above $1.1473, it could target $1.1500 and potentially $1.1600. Continued weakness in the U.S. dollar and positive Eurozone data would support this move. ❌ Bearish Scenario: Failure to sustain above $1.1300 may lead to a retest of $1.1200, with further declines possible toward $1.1100 if bearish momentum increases. 📌 Conclusion: EUR/USD is exhibiting strong bullish momentum, breaking through key resistance levels. Traders should monitor upcoming economic indicators and geopolitical developments that may influence the pair's direction. 💬 What's your outlook for EUR/USD? Do you anticipate continued strength in the euro, or will the dollar regain its footing? Share your thoughts below! Let me know if you'd like this analysis tailored for a specific platform or with additional details!
Long
by Saeed966
5
EUR/USD - Further Room For Bullish MoveEUR/USD is nearing the upper trendline of a descending wedge on the weekly chart, currently at 1.13297, near the 1.1200 resistance. The 50-week EMA (blue) is above the 200-week MA (red), indicating underlying bullish momentum, and stochastic Oscillator has also room for further upside move. Below is the likely setup: Bullish Setup (Sustained Breakout Above Resistance): Buy Entry: On a weekly close above 1.1200 or retest of 1.1200 as support. Stop Loss: 1.1100. Take Profit: 1.1750 (first target), 1.2300 (second target). Confirmation: Strong close above 1.1200, Stochastic holding above 50 after a pullback. If you found this analysis valuable, kindly consider boosting and following for more updates. Disclaimer: This content is intended for educational purposes only and does not constitute financial advice.
Long
by MarketsPOV
Gold Closes the Week Strong – Breakout Toward $3300 Coming?📊 XAU/USD Daily Technical Outlook – April 11, 2025 Gold rebounded strongly during Friday’s session, climbing from early lows around $3,177 to reach a high of $3,237. This bounce followed a brief correction the day before, as buyers stepped back in near key psychological levels. The move was partially driven by ongoing geopolitical tensions and renewed demand for safe-haven assets. At the moment, gold is trading around $3,212, holding its gains firmly into the weekly close. The broader market remains bullish, with the uptrend still intact unless key supports are breached. 📈 Current Market Structure: After Thursday’s pullback, Friday’s strong bullish candle suggests renewed momentum. Price is still moving within an ascending structure, and the sharp recovery could be an early signal of a continuation toward new highs. 🔹 Key Resistance Levels: $3,237: Immediate resistance. Friday’s high. A break above this level could trigger further bullish continuation. $3,280: Potential upside target if momentum continues. $3,300: Psychological resistance and potential long-term target. 🔸 Key Support Levels: $3,177: Intraday support. If gold pulls back again, this level may provide a bounce. $3,150: Near-term support and a key structural level. $3,095: Deeper support, marking the bottom of the previous breakout area. 📐 Price Action Patterns: Friday's bullish engulfing candle signals strong buying pressure, especially after Thursday’s correction. If buyers defend current levels early next week, we may see a bullish continuation. However, failure to break $3,237 may trigger another consolidation phase. 🧭 Potential Scenarios: ✅ Bullish Scenario: If gold breaks and holds above $3,237, this could trigger a move toward $3,280 or even $3,300. Buyers remain in control as long as price stays above $3,177. ❌ Bearish Scenario: If gold fails to push above resistance and breaks below $3,177, we could see a retest of $3,150, and possibly deeper toward $3,095 if bearish momentum increases. 📌 Conclusion: Gold showed resilience on April 11, recovering sharply from a brief dip and closing the week on a strong note. The market structure remains bullish, and a sustained break above resistance could lead to fresh all-time highs. Traders should continue to monitor geopolitical news and dollar strength for clues on short-term direction. 💬 What’s your take on gold heading into next week? Will bulls take control again, or are we in for more consolidation? Drop your thoughts below! Let me know if you want a version ready for TradingView or with hashtags and emojis for social media!
OANDA:XAUUSDLong
by Saeed966
6
Fundamental Market Analysis for April 11, 2025 EURUSDEUR/USD hit its highest levels in nearly two years on Thursday, breaking through and closing above 1.1200 for the first time in 21 months. Market tensions continue to ease after the Trump administration dropped its own tariffs at the last minute, causing a general weakening in US Dollar flows. US consumer price index (CPI) inflation fell significantly short of forecasts in March. The core CPI fell to 2.8 per cent year-on-year, a four-year low after nearly eight months above 3.0 per cent. Core CPI inflation also fell to 2.4 per cent year-on-year. Investment markets will face a major challenge if the tariffs reverse the Federal Reserve's (Fed) multi-year efforts to curb inflation. On Friday, the week will conclude with the release of the University of Michigan (UoM) Consumer Sentiment Index survey. The University of Michigan's consumer sentiment index is expected to decline again in April as consumers feel the pressure of the Trump administration's tariff and trade policies, and is likely to fall to a near three-year low of 54.5. In addition, expected consumer inflation data will be released on Friday, with UoM's 1-year and 5-year expected consumer inflation previously standing at 5% and 4.1% respectively. Trade recommendation: SELL 1.1305, SL 1.1380, TP 1.1150
Short
by Fresh-Forexcast2004
EU Tariff Relief Drives Euro Above $1.13The euro climbed above $1.13, its highest since September 2024, after the EU suspended new U.S. tariffs for 90 days to allow trade talks. This followed President Trump’s move to cut tariffs to 10% for non-retaliating countries while raising Chinese duties to 125%. While easing global slowdown fears, the mixed signals fueled uncertainty. Money markets adjusted ECB expectations, pricing the deposit rate at 1.8% by December, up from 1.65%, and lowered the probability of an April cut to 90%. Key resistance is at 1.1390, followed by 1.1425 and 1.1500. Support lies at 1.1260, then 1.1180, and 1.1100.
by ChartMage
EURUSD Tests 17-Year Long-Term Trend!!!After Trump announced an additional 20% in tariffs, EURUSD made a relatively surprising move and surged sharply. This marks the second leg of the upward trend that began in early March. However, the sharp rise has now brought EURUSD to the doorstep of a very long-term resistance level. Since testing 1.60 in 2008, EURUSD has been moving lower within a wide descending trend channel that has held for 17 years. Since 2015, the pattern has evolved into a wedge formation within this broader channel. The most recent test of this resistance came last year, but at the time, a weak Eurozone economy, crowded Euro long positions, and a hawkish Fed prevented a breakout. This time, the landscape is different. The Eurozone is showing early signs of recovery, the ECB’s rate cuts appear to be nearing their end, and European countries have started to band together following a decline in confidence in their biggest ally and decide to increase technology, defence spending. Despite these developments, the medium-term effects of the new tariffs and the strength of the long-term resistance level are likely to prevent a clear breakout for now. Still, the long-term outlook is beginning to shift in favor of the euro, and a breakout later this year carries a significant probability.
by ftdsystem
Dollar Index Tests Key Demand Zone: What's Next?The Dollar Index is currently testing a major demand zone between 99.50 and 101. This area has marked the end of downward moves and the beginning of dollar rallies five times since early 2023. The recent downward pressure is largely driven by rising expectations of an economic slowdown and a strengthening euro. At this point, several possible scenarios could unfold, depending on how the market reacts to this key support zone: Repeat of the Past: Just like the previous five instances, the Dollar Index rebounds sharply from the zone and starts a strong upward move. Trendline Test: The Dollar Index breaks below this zone and moves toward testing the long-term uptrend line that originated in 2011. Fakeouts and Reversal: The Dollar Index briefly falls below the demand zone, approaches the long-term trendline, and then stages a false recovery above the zone. After trapping both bulls and bears and creating a fake breakout signal, it dips below the trendline before reversing and beginning a new medium-term uptrend that ultimately aligns above the long-term trend. Given the high level of global economic uncertainty and recent sharp reversals in financial markets, the third scenario may carry slightly higher probability. A similar pattern played out in 2017, when both the 200-week moving average and the demand zone were broken. The key difference this time is that TVC:DXY is much closer to the long-term trendline.
TVC:DXY
by ftdsystem
EURUSD UPDATE FOR NEW TRADERS Let’s break down what’s happening with the Euro vs. US Dollar (EUR/USD) 📈 PRICE RIGHT NOW ➡️ EURUSD is trading at 1.13417, which means the Euro is gaining strength against the Dollar. ➡️ It’s up +1.28% and just entered a zone where many big traders are looking to sell (called a SUPPLY ZONE) at around 1.12020 – 1.13980. ⚠️ WHY THIS MATTERS TO YOU The EURUSD is getting ready to move — maybe sharply. Today (April 11), there’s important news coming from both Europe and the U.S. that could shake up the market. 🗓️ BIG NEWS TO WATCH TODAY Here’s what’s on the calendar and how it could affect your trade: ECB President Speaking (2:45 AM PT) If she sounds confident about Europe’s economy, the Euro could go up even more If not, it may drop. Inflation Report (PPI) (5:30 AM PT) If prices in the U.S. are rising fast, the Dollar could get stronger. That could make EURUSD go down. Consumer Sentiment & Fed Speeches (7:00–8:30 AM PT) If Americans are feeling positive about the economy if Fed speakers hint at raising interest rates, the Dollar could jump. 🎯 WHAT TO DO AS A TRADER If you're already in a SELL trade near 1.12020, you’re in the right zone — just be careful of price spiking toward 1.13980 before dropping. Your next target to take profit is around 1.08289, which is where price might pull back to. If price goes above 1.14948, it could mean the SELL setup failed — that’s your STOP LOSS zone . ✅ SIMPLE GAME PLAN Watch the news today! Big moves may happen during or after these reports. Hold your position if the news supports your trade. Close your trade or move your stop if the news goes against you. If you're unsure, this is a great time to sit back, watch the market react, and learn.
Short
by ProfessorCEWard
CADJPY WILL BULLISH OR BEARISH ?? DETAILED ANALYSISCADJPY is currently forming a clear descending wedge pattern on the 12H chart, which historically signals a high-probability bullish reversal. The price has respected both the upper descending trendline and the lower support line with precision over the past few months, but the recent reaction near the wedge support is showing signs of buying interest. With the current price trading at 103.10, we are at a critical juncture where a breakout to the upside could initiate a strong momentum rally toward the 109.00 target. Technically, this setup is supported by multiple touchpoints on both trendlines, suggesting a mature wedge structure ready to break. The risk-reward ratio is extremely favorable here, with clear invalidation below 100.90 and upside potential aligned with the upper structure of the broader consolidation zone. A confirmed breakout and candle close above the 104.00 resistance area would likely signal the start of a bullish impulse wave targeting 109.00 in the medium term. On the fundamental side, CAD is supported by firm oil prices, which have remained elevated due to ongoing geopolitical risks and OPEC+ production cuts. Meanwhile, the JPY continues to weaken as the Bank of Japan remains firmly committed to ultra-loose monetary policy, even as inflation expectations globally stay elevated. This divergence in monetary policy between the BoC and BoJ is fueling carry trade flows, further boosting CADJPY's bullish outlook. Looking ahead, any signs of risk-on sentiment in global markets, combined with resilient Canadian data, could act as a catalyst for the breakout. With the market positioning leaning heavily on JPY shorts and crude oil demand remaining strong, CADJPY is technically and fundamentally poised for a breakout rally. I'm watching the 104.00 zone closely—once cleared, I anticipate a swift move toward 109.00 with momentum on our side.
Long
by AndrewsMarket-Mastery
4
DeGRAM | EURUSD held in the channelEURUSD is in an ascending channel between trend lines. The price is moving from the lower trend line, which has already acted as a rebound point, and the lower boundary of the channel, above which it has successfully consolidated. The chart formed a harmonic pattern while testing the boundaries and is now approaching the upper boundary of the triangle. On the main timeframes RSI is above 50 pips, but 30m is overbought. We expect EURUSD to continue rising after consolidating above the upper trend line. ------------------- Share your opinion in the comments and support the idea with like. Thanks for your support!
Long
by DeGRAM
1
Hellena | EUR/USD (4H): LONG to the resistance area 1.11613.Colleagues, the price is in the correction of wave “2”. I believe that the upward five-wave impulse is not yet complete. In any case, I think that the price will still reach the maximum of wave “1” at 1.11613. The question is how far will the correction of wave “2” go or is it over? There is no way to know for sure, so I don't recommend selling. I think we should stick to long positions. Manage your capital correctly and competently! Only enter trades based on reliable patterns!
Long
by Hellena_Trade
10
GBP/USD at a Crossroads: Imminent Breakout or Bull Trap?The weekly chart of GBP/USD shows a strong recovery following the late-April correction, which brought the price down to a key demand zone between 1.2550 and 1.2600. The bounce was sharp and decisive, but the pair is now facing resistance between 1.3000 and 1.3150 — a previously sold area marked by a visible supply block in red. The current weekly candle reflects a bullish reaction, but the overall structure suggests a potential exhaustion zone for upward momentum. Price action reveals a series of lower highs in the short term, and while the RSI is bouncing, it remains far from overbought, hinting that this move may be just a technical rebound. From a trading perspective, a confirmed weakness around the 1.3000–1.3150 zone could offer short opportunities with an initial target near 1.2700 and, if extended, down to 1.2550 — a key dynamic support area. On the flip side, a clean breakout above 1.3150 with strong volume and a weekly close would open the door for a new bullish leg toward 1.3300–1.3400. Conclusion: GBP/USD is currently at a critical juncture. The next directional move will depend on how price reacts to this resistance zone: a confirmed rejection could trigger renewed selling pressure, while a confirmed breakout may reignite the bullish trend.
Short
by EdgeTradingJourney
1
EURUSDHello Traders! 👋 What are your thoughts on EUR/USD? EUR/USD has broken above the resistance zone and is currently trading above the breakout level. A pullback to the broken level is expected before the next bullish move. Once the pullback is complete, we anticipate a continuation of the uptrend toward the specified target. Holding above the broken resistance would reinforce the bullish outlook. Will EUR/USD maintain momentum after the pullback? Share your views below! Don’t forget to like and share your thoughts in the comments! ❤️
Long
by HAMED_AZ
8
EURUSD H4 I Bearish Reversal Based on the H4 chart analysis, we can see that the price is approaching our sell entry at 1.1327, aligning with the 161.8% Fibo extension and 2005 Fibo projection. Our take profit will be at 1.1143, a pullback support level. The stop loss will be placed at 1.1477, a pullback resistance. High Risk Investment Warning Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you. Stratos Markets Limited (tradu.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd (tradu.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Global LLC (tradu.com): Losses can exceed deposits. Please be advised that the information presented on TradingView is provided to Tradu (‘Company’, ‘we’) by a third-party provider (‘TFA Global Pte Ltd’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by TFA Global Pte Ltd. The speaker(s) is neither an employee, agent nor representative of Tradu and is therefore acting independently. The opinions given are their own, constitute general market commentary, and do not constitute the opinion or advice of Tradu or any form of personal or investment advice. Tradu neither endorses nor guarantees offerings of third-party speakers, nor is Tradu responsible for the content, veracity or opinions of third-party speakers, presenters or participants.
Short
by Tradu
FX Liquidity 'Worse Than Covid' Amid Tariff Shock. Long EUR/USD?Liquidity Seizes Up: Dealers Report Conditions 'Worse Than Covid' Amid Tariff Turmoil The intricate plumbing of the global foreign exchange market, typically the world's deepest and most liquid financial arena, experienced a severe blockage in recent days, with dealers reporting liquidity conditions even more challenging than during the peak of the Covid-19 crisis in early 2020. Triggered by the sudden announcement of potential sweeping tariffs by former US President Donald Trump, the ability to execute large trades without significantly moving prices evaporated, creating treacherous conditions for market participants before a temporary pause on the tariff implementation offered a brief respite. Reports indicate that available liquidity for a single transaction, or "clip," in major currency pairs plummeted to lows around $20 million. While this figure might still sound substantial, it represents a dramatic reduction from the norms in the multi-trillion dollar-a-day spot FX market, where clips of $50 million, $100 million, or even more could typically be absorbed with minimal market impact, especially in benchmark pairs like EUR/USD. This liquidity drought occurred paradoxically alongside a spike in overall trading volumes. Both algorithmic trading systems and human traders on principal desks were highly active, reacting to the news flow and heightened volatility. However, this surge in activity masked a fundamental deterioration in market quality. High volume accompanied by low liquidity signifies frantic, often smaller, trades occurring across widening bid-ask spreads, with market makers unwilling or unable to provide firm quotes for substantial sizes. It's the market equivalent of a crowded room where everyone is shouting, but no one is willing to make a firm commitment. Why 'Worse Than Covid'? Unpacking Dealer Sentiment The comparison to the Covid-19 crisis is stark and revealing. The initial wave of the pandemic in March 2020 caused unprecedented volatility across all asset classes as the world grappled with lockdowns and economic shutdowns. FX liquidity certainly suffered then, with spreads widening dramatically. However, dealers suggest the current environment, driven by tariff uncertainty, felt different, and arguably worse, for several reasons: 1. Nature of the Shock: Covid-19, while devastating, was primarily a health crisis with economic consequences. Central banks globally responded with massive, coordinated liquidity injections and policy easing, providing a clear backstop (even if the initial shock was severe). The tariff announcement, however, represents a political and policy shock. Its potential impact is multifaceted – affecting inflation, growth, supply chains, corporate earnings, and international relations – and far harder to model. The policy path forward, including potential retaliation from other countries, is deeply uncertain. 2. Central Bank Reaction Function: During Covid, the playbook for central banks was relatively clear: provide liquidity and ease financial conditions. In response to potential tariffs, the central bank reaction is much less certain. Tariffs could be inflationary (raising import costs), potentially pushing central banks towards tighter policy, while simultaneously being negative for growth, which might argue for easing. This ambiguity makes it harder for markets to price in a predictable policy response, adding another layer of uncertainty that dampens risk appetite and liquidity provision. 3. Fundamental Uncertainty vs. Panic: While Covid induced panic, the underlying driver was identifiable. The tariff threat introduces deep uncertainty about the fundamental rules of global trade. This makes it exceptionally difficult for market makers, who provide liquidity, to price risk accurately. When risk becomes unquantifiable, the natural reaction is to withdraw, reduce quote sizes, and widen spreads significantly to avoid being caught on the wrong side of a large, unhedged position. The Tariff Trigger: A Wrench in the Works Donald Trump's proposal for a "reciprocal" or blanket tariff system, potentially starting at 10% on all imports with higher rates for specific countries, fundamentally challenges the existing global trade framework. The announcement immediately forced market participants to reassess: • Inflation Outlook: Tariffs directly increase the cost of imported goods, potentially fueling inflation and impacting interest rate expectations. • Economic Growth: Trade wars can disrupt supply chains, raise business costs, reduce export competitiveness (due to retaliation), and dampen consumer and business confidence, weighing on growth. • Currency Valuations: Currencies of countries heavily reliant on exports to the US, or those potentially facing steep retaliatory tariffs, came under pressure. The US dollar itself experienced volatility as markets weighed the inflationary impact against the potential growth slowdown and risk-aversion flows. This complex interplay of factors, combined with the political uncertainty surrounding the implementation and potential scope of such policies, created a perfect storm for volatility. Algorithmic systems, programmed based on historical correlations and data, struggled to navigate a potential regime shift driven by policy pronouncements. Human traders, facing heightened risk and uncertainty, became more cautious. Liquidity providers, facing the risk of being adversely selected (i.e., only trading when the market is about to move sharply against them), drastically reduced their exposure. The Impact: Beyond the Trading Desks The evaporation of liquidity has real-world consequences: • Increased Transaction Costs: Corporates needing to hedge currency exposure for international trade face higher costs (wider spreads). • Execution Risk: Asset managers rebalancing global portfolios find it harder and more expensive to execute large trades, potentially suffering significant slippage (the difference between the expected execution price and the actual price). • Systemic Risk: In highly leveraged markets, poor liquidity can exacerbate sell-offs. Margin calls, as reportedly seen alongside the tariff news, can force leveraged players to liquidate positions rapidly into an illiquid market, potentially triggering a domino effect. The temporary pause in the tariff implementation announced subsequently provided some relief, likely allowing liquidity to recover partially from the extreme lows. However, the underlying uncertainty hasn't disappeared. Until there is greater clarity on the future direction of US trade policy, the FX market is likely to remain susceptible to bouts of nervousness and reduced liquidity. Should You Long EUR/USD Based on This? A Cautious No. While the liquidity situation is dire and reflects significant market stress, using poor FX liquidity itself as a primary reason to take a directional view, such as longing EUR/USD, is generally flawed logic. Here's why: 1. Liquidity is Not Direction: Market liquidity reflects the ease and cost of transacting, not necessarily the fundamental direction of an asset price. Poor liquidity is a symptom of high volatility, uncertainty, and risk aversion. While these factors can influence currency direction (e.g., risk aversion often benefits perceived safe-haven currencies), the liquidity state itself isn't the driver. Both buyers and sellers face the same poor liquidity. 2. Universal Impact: The reported liquidity crunch affected the global spot FX market. While specific pairs might have been hit harder at times, the underlying issue was broad-based risk aversion and dealer pullback, impacting EUR/USD, USD/JPY, GBP/USD, and others. It doesn't inherently favor the Euro over the Dollar. 3. Focus on Fundamentals and Sentiment: A decision to long EUR/USD should be based on a broader analysis of: o Relative Monetary Policy: Expectations for the European Central Bank (ECB) versus the US Federal Reserve (Fed). o Economic Outlook: Growth prospects in the Eurozone versus the United States. o Risk Sentiment: Is the broader market mood risk-on (often favoring EUR) or risk-off (which can sometimes favor USD, though the tariff news complicated this)? o Tariff Impact Analysis: How would the proposed tariffs, if implemented, differentially impact the Eurozone and US economies? Would potential EU retaliation harm the US more, or vice-versa? 4. Increased Trading Risk: Poor liquidity makes any trade riskier and more expensive. Spreads are wider, meaning entry and exit costs are higher. Slippage on stop-loss orders or take-profit orders is more likely. Executing large sizes is challenging. Therefore, even if you have a strong fundamental view to long EUR/USD, the current liquidity environment makes executing and managing that trade significantly more difficult and costly. Conclusion The recent seizure in FX liquidity, reportedly surpassing the severity seen during the Covid crisis onset, underscores the market's extreme sensitivity to geopolitical and policy uncertainty. The threat of sweeping tariffs injected a level of unpredictability that forced liquidity providers to retreat, even amidst high trading volumes. While the temporary pause offers breathing room, the fragility remains. For traders, this environment demands heightened caution, smaller position sizes, and wider stop-losses. Critically, basing directional trades like longing EUR/USD solely on the state of market liquidity is misguided. Such decisions must stem from a thorough analysis of economic fundamentals, policy outlooks, and risk sentiment, while acknowledging that poor liquidity significantly raises the cost and risk of executing any strategy.
by bryandowningqln