Forex Analysis & Reviews: 21.04.2025 - EUR/USD Overview

21.04.2025 04:01 AM

EUR/USD Overview – April 21: The Market Sleeps, Only Trump Can Wake It Up

On Friday, the EUR/USD currency pair made no notable movements whatsoever. This was unsurprising, as Friday marked Good Friday, and Sunday was Easter. Many banks and trading venues were closed, and traders and investors were off for the holiday. As such, there's little to say about Friday. The euro closed the week not far from its local highs, and a clear sideways trend marked the last five trading days. The euro has climbed to exceptional levels in a short time and isn't even attempting a correction. We believe the current market situation is as clear as possible—but no less risky than before.

Only one factor currently matters to the market: Donald Trump. In a way, this simplifies analysis significantly. With just one key factor, all others can be set aside. Last week, traders completely ignored the European Central Bank meeting and the rate cut. Therefore, if Trump continues to escalate the trade conflict with half the world, the dollar will likely keep falling. If he holds back, the market may remain flat. If he softens his stance, the dollar may strengthen gradually.

It may seem simple. But it's not. No one knows what the next move of the controversial U.S. president will be. In the past three months, Trump has taken many surprise actions, leaving markets reeling. While it seems like the trade war will only worsen, one must remember that the U.S. economy will suffer significantly from Trump's decisions, and the Fed is in no rush to assist the president.

Thus, at some point, Trump could grant a full amnesty to many countries. And he won't even need to justify it to voters or consumers. He can announce that deals have been signed and all "blacklisted" countries have agreed to Washington's terms. Alternatively, Trump might claim he's concerned for American citizens who now have to pay more for many goods. Therefore, "we must be flexible," and he cancels or reduces tariffs out of sympathy for the global population. Right now, a downward move in EUR/USD seems unthinkable—but knowing Trump, it could begin just as abruptly as the recent rally.

The average volatility of the EUR/USD pair over the last five trading days, as of April 21, stands at 98 pips, which is considered "high." We expect the pair to move from 1.1296 to 1.1497 on Monday. The long-term regression channel is directed upward, indicating a short-term bullish trend. The CCI indicator has entered the overbought zone twice, signaling a possible correction. A bearish divergence has also formed. However, the dollar could resume falling at any moment, and the euro shows no rush to correct.

Nearest Support Levels:

S1 – 1.1353

S2 – 1.1230

S3 – 1.1108

Nearest Resistance Levels:

R1 – 1.1475

Trading Recommendations:

The EUR/USD pair continues to trend upward. For months now, we've been saying we expect the euro to fall in the medium term—and that hasn't changed. The dollar, other than Donald Trump, still has no real reason to decline in the medium term. Yet that alone keeps pushing the dollar downward. Moreover, it is now completely unclear what consequences Trump's actions will have for the U.S. economy. When Trump steps back, the U.S. economy could be in serious trouble—making any dollar recovery unlikely.

If you're trading based on pure technicals or "on Trump," then long positions can still be considered while the price holds above the moving average, with targets at 1.1475 and 1.1492.

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.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.