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Asset Watch
Wednesday, 23 April 2025
The US dollar stabilized, and market risk appetite improved slightly as concerns over the Trump administration’s unpredictable policy actions began to ease. First, ruling out the possibility of removing the Federal Reserve Chairman brought some relief to markets, signaling a reduced likelihood of interference in the Fed’s decision-making independence. This came despite the US president’s dissatisfaction with current monetary policy and his calls for rapid interest rate cuts—an implicit sign of concern that the economy may be heading toward a recession due to tariffs imposed since he took office.
Second, the US Treasury Secretary calmed investor worries about the ongoing tariff situation, adopting a more conciliatory tone on the trade war with China and expressing hope that tensions would ease soon.
Preliminary data for the European manufacturing and services sectors in April was released today. This data is especially important now as it offers insight into how businesses are reacting to the broad tariffs imposed by President Trump at the start of the month. Despite that these tariffs were later suspended for 90 days to allow time for negotiations aimed at reaching trade agreements that would mitigate or eliminate their impact.
The European manufacturing PMI rose to 48.7, beating expectations of 47.4. However, the services PMI dropped into contraction territory, coming in at 48.8 versus the expected 50.3.
Markets now await similar PMI data from the US manufacturing and services sectors, due today at 5:45 PM UAE time. Projections suggest a decline in the manufacturing index to 49, and a drop in the services index from 54.4 to 52.8.
It’s worth noting that PMI figures could rise in both the US and Europe in the coming period, especially if no trade agreement is reached and the 90-day negotiation deadline approaches without news of an extension. In anticipation, businesses may increase purchase orders to stockpile goods ahead of any potential tariff enforcement.
The Euro fell against the US dollar after failing twice to close above the upper boundary of its current trading zone between 1.1510 and 1.1176. The decline of the Relative Strength Index below 70 confirms weakening bullish momentum.
As a result, prices may now be heading toward a test of the low end of this trading zone, given the repeated failure to close above its high end. A daily close below this low-end level could trigger a correction down to 1.0981. In this case, support at 1.1053 should be closely monitored.
A daily close above the high end of the trading zone at 1.1510 would signal strong bullish momentum, potentially driving prices toward 1.1715. If this scenario plays out, the resistance level at 1.1664 should be watched closely.
Chart Source: ADSS Platform
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