The foreign exchange (forex) market is rapidly evolving due to various factors that significantly influence trading activities. Investors and market participants are currently navigating a landscape shaped by geopolitical developments and central bank policies. This landscape is shaped by geopolitical developments, changing tariffs, and the policies of central banks worldwide. In 2025, the financial landscape is profoundly impacted by various monetary policies, each affecting currency valuation and investor sentiment.
Moreover, the resurgence of trade tensions has further complicated market dynamics. The global economy is adjusting as it recovers from the effects of the pandemic. We will closely examine the major currencies using both fundamental and technical perspectives for a complete analysis. We will focus on key currency pairs such as EUR/USD, GBP/USD, AUD/USD, USD/JPY, and USD/CAD. Additionally, we will provide a forward-looking outlook on their potential paths in the changing forex landscape.
EUR/USD
Daily Chart
The euro has gained momentum against the U.S. dollar, primarily due to geopolitical developments and economic indicators. President Donald Trump decided to postpone the 50% tariffs on imports from the European Union. This decision is set to take effect on July 9. As a result, trade tensions have been alleviated. This decision has increased investor confidence in the euro. Furthermore, the U.S. dollar is under pressure due to worries about fiscal policies. A proposed tax bill is expected to raise U.S. debt by $3.8 trillion over the next ten years
From a technical perspective, recent moves favor bulls in what appears to be a 4th wave, with new highs displaying 5th wave according to Elliott wave theory. This possible 5th wave
GBP/USD
The British pound has strengthened significantly, reaching levels not seen since February 2022. This surge is attributed to strong macroeconomic data and optimism surrounding UK-EU trade relations . A sharper-than-expected rise in UK inflation to 3.5% in April has created expectations. The Bank of England may implement only one more rate cut this year. This could limit further gains for the pound
AUD/USD
The Australian dollar has shown resilience, benefiting from a general decline in the U.S. dollar. However, the Reserve Bank of Australia’s recent rate cut has introduced some downward pressure on the currency . Concerns about a possible trade war between the U.S. and China may affect Australia’s export-driven economy. This could influence the movements of the AUD/USD currency pair.
The Aussie versus the greenback has witnessed sideways price action for much of the year. Traders will be keeping an eye on 0.66 level as it represents both the psychological level and 0.618 fibonacci retracement from September 2024 high to April 2025 low.
USD/JPY
The Japanese yen has appreciated against the U.S. dollar, with USD/JPY falling below the 143.00 level. This movement is influenced by Japan’s Leading Economic Index. It was revised up to 108.1 for March 2025, indicating a positive economic outlook. Rising concerns about U.S. fiscal policies and possible tax cuts have weakened investor confidence in U.S. assets. This situation has contributed to the strength of the yen.
USD/CAD
The Canadian dollar has proven strong against the U.S. dollar. The USD/CAD rate has rebounded before reaching the monthly low of 1.3751. The pair is influenced by expectations of interest rate cuts by the Bank of Canada, which could limit the CAD’s weakness . Furthermore, the U.S. dollar is under pressure from fiscal issues. This includes a credit rating downgrade by Moody’s, which is a result of increasing federal debt.
Ronald Francois
Ronald is a senior market strategist at Sigmanomics.com, bringing over a decade of hands-on experience in equity markets and three years of specialized expertise in options trading. Known for his sharp fundamental analysis and deep understanding of macroeconomic trends, Ronald provides readers with actionable insights that bridge the gap between institutional strategy and individual investor needs.
