US Dollar Regains Strength. Forecast as of 06.10.2025 | LiteFinance
Has the US economy slipped into a recession, or is it experiencing rapid economic growth? For investors, this is just another mystery. The data is often mixed, and it is currently unavailable due to the government shutdown. Let’s discuss this topic and develop a trading plan for the EURUSD pair.
The article covers the following subjects:
Major Takeaways
- There is a gap between US GDP and employment.
- The eurozone economy is two-speed.
- Europe has lost the currency war.
- Positions on the EURUSD pair can be opened on a breakout of the 1.168–1.178 range.
Weekly US Dollar Fundamental Forecast
If the eurozone economy can be described as two-speed, then the US economy is crippling. In the second quarter, US GDP grew by an impressive 3.8%, and in the third quarter, the Federal Reserve Bank of Atlanta’s leading indicator expects the same rate of growth. However, the cooling of the labor market can be seen even without the official data, and the latest PMI points to stagnation. What is occurring with the US economy? Without an answer to this question, the EURUSD pair will find it difficult to break out of the consolidation range.
US GDP and Nonfarm Payrolls
Source: Wall Street Journal.
US GDP and employment may occasionally move in opposite directions, but the gap is rarely so large and persistent.
It is quite possible that gross domestic product data will be revised downward, or the differential will narrow due to a stronger labor market, or AI solutions may boost the economy more than expected. As a rule, as productivity increases, so does GDP. This is consistent with the record highs of the S&P 500 index and explains the stability of the US dollar.
Donald Trump prefers not to talk about “some nonsense on the economy,” calling it incredible. However, he often associates economic growth with stock market rallies. The US administration recommends waiting until 2026, when the impact of the big and beautiful tax cut bill will become apparent.
The picture is different in the eurozone. At first glance, its economy has managed to withstand the negative impact of US tariffs with flying colors, and the reduction in trade uncertainty has had a positive effect on PMIs. At the same time, there is a clear two-speed GDP. On the one hand, Spain, Portugal, and Greece are doing well thanks to tourism and the influx of migrants. On the other hand, Germany and France are burdened by export, political, and geopolitical problems.
Euro Performance
Source: Bloomberg.
Not only did Europe lose in the trade war, but it also lost in the currency war. Since the beginning of 2025, the euro has risen by 13.2% against the US dollar and by 20.5% against the Chinese yuan over the past three years. Although the euro’s trade-weighted exchange rate still allows exporters to compete, they are clearly losing to their competitors from larger countries.
A further rally in the EURUSD rate would create additional obstacles for the eurozone. Therefore, the ECB is attempting to demonstrate division within its ranks. However, its cycle of monetary expansion is most likely over.
Weekly EURUSD Trading Plan
Thus, the EURUSD pair has entered a consolidation phase. However, there should be a strong driver to break through the 1.168–1.178 consolidation range. Against this backdrop, you can refrain from entering the market or bet on a breakout of the resistance levels of 1.1755 and 1.178 or the support levels of 1.1695 and 1.168.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance broker. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2014/65/EU.
According to copyright law, this article is considered intellectual property, which includes a prohibition on copying and distributing it without consent.
