Markets overview. EUR/USD Eyes 1.15 as US Dollar Confidence Crisis Persists – ForexNews.PRO
Yesterday’s tepid rise in US stock values indicates ongoing market unease, even with tariff reprieves from China. The dollar’s failure to strengthen, despite a recovery in Treasury bonds, suggests a persistent lack of confidence in the USD, making a swift turnaround unlikely. A move towards 1.15 for EUR/USD seems plausible, as the euro remains a preferred safe haven from dollar-related anxieties.
While US equities and bonds performed adequately on Monday, the gains were modest compared to the breadth of tariff exemptions announced. Markets continue to factor in a risk premium for US assets, including the dollar, estimated between 2% and 5% across G10 currencies. However, current FX volatility cautions against taking these deviations at face value.
The options market clearly signals a bearish sentiment towards the dollar, with investors inclined to sell USD during rallies. Even if the worst market dysfunction is behind us, a decline in US data and the repercussions of “chaotic” trade policies are expected to linger.
Treasury Secretary Bessent dismissed the notion of foreign nations dumping US Treasuries, attributing bond losses to deleveraging. While the Treasury has tools to support the market, they are not currently needed.
The balance of risks remains skewed against the dollar, despite stabilization in the Treasury market. The economic calendar includes the Empire Manufacturing index, expected to rebound but remain negative. The market’s bearish sentiment and potential for further dollar weakness suggest EUR/USD could target 1.15, driven by the euro’s appeal as a safe haven due to the USD’s perceived risks.
