Dollar's Dip Impacts Currencies and Gold (04.21.2025)

The financial markets experienced significant fluctuations, driven by a weakening U.S. dollar and escalating trade tensions.

The EUR/USD climbed with concerns over the Federal Reserve's independence, while the Japanese yen strengthened as the dollar weakened. Gold prices surged to a new all-time high, fueled by trade fears and a low-yield environment. The British pound extended its winning streak, supported by the dollar's slide, and silver prices hovered.

EUR/USD Surges to 1.1470 on Dollar's Three-Year Low

EUR/USD opened the week with strong momentum, climbing to around 1.1470 on Monday morning. This surge came as the U.S. dollar index dropped to a fresh three-year low near 98.6, pressured by rising concerns about the Federal Reserve’s independence. Market anxiety intensified following renewed criticism from President Donald Trump, who stated last week that the removal of Fed Chair Jerome Powell "cannot come fast enough," calling for deeper rate cuts. These remarks added to ongoing market unease already fueled by trade tensions and policy uncertainty under the Trump administration.

Key resistance levels are seen at 1.1530, 1.1600, and 1.1680, while support is located at 1.1400, 1.1260, and 1.1180.

Yen Rises on Powell Removal Talks

The Japanese yen strengthened past 141 per dollar, reaching its highest level in seven months as the U.S. dollar weakened with growing fears over the Fed’s independence. The move followed reports that the White House is considering removing Fed Chair Powell, reflecting Trump’s frustration with the central bank’s stance on interest rates.

In parallel, trade negotiations with Japan continue. Tokyo is reportedly considering increased imports of U.S. soybeans and rice as part of potential trade concessions. U.S. officials, meanwhile, have been pressing Japan to open up its automobile and agricultural sectors while pushing for more American exports of meat, fish, and potatoes. Markets now turn to the upcoming Bank of Japan meeting, where policymakers are widely expected to maintain the benchmark interest rate at 0.5%.

Resistance is noted at 142.00, 144.00, and 145.90, while support lies at 139.70, 137.00, and 135.00.

XAU/USD Driven by ECB Rate Cut

Gold prices surged more than 1% on Monday, reaching a new all-time high above $3,370 per ounce. The rally was driven by intensifying global trade tensions and a weakening U.S. dollar, which has fallen to its lowest level in three years. The dollar’s decline has made gold more attractive to non-dollar investors.

The latest catalyst came from President Trump’s order for a probe into possible new tariffs on all U.S. critical mineral imports, sparking further trade fears, especially with China. The ECB’s recent rate cut also strengthened gold’s appeal in a low-yield environment. Sentiment was further shaken after White House adviser Kevin Hassett confirmed that the administration is still reviewing Powell’s position, deepening concerns about the Fed’s autonomy.

Key resistance is at $3400, followed by $3,450 and $3,500. Support stands at $3356, then $3310, and $3250.

British Pound Extends Winning Streak

The British pound extended its winning streak for a 10th straight session, testing the 1.3390 level, its highest in seven months. The rally was supported by the continued slide in the U.S. dollar, as rate cut expectations for 2025 remain priced in at 86 basis points.

Despite a recent inflation miss, the pound held firm with ongoing trade war uncertainty. This week, attention will be on key U.S. economic releases and developments in China-U.S. trade dynamics, which could steer the pair’s direction.

Should GBP/USD break above 1.3430, resistance levels are seen at 1.3500 and 1.3550. On the downside, support is positioned at 1.3300, 1.3200, and 1.3050.

XAG/USD Influenced by China Rate Decision

Silver hovered around $33.70 on Monday morning on rising trade war fears and a weaker dollar. The ongoing slide in the dollar has continued to support precious metal prices.

With markets relatively quiet due to holidays across Europe and the UK, attention briefly turned to China, where the People’s Bank of China kept key interest rates unchanged in its latest announcement overnight. Investors will now focus on upcoming economic data expected later in the week.

Resistance is currently at 33.15, 33.80, and 34.20, while support levels are set at 31.40, 30.20, and 29.20.