EURUSD, Gold Forecast: Markets Spiral on Trade War Risks
Key Events to Watch:
- Trade war tensions rise ahead of NFP week
- Markets revisit Deepseek drawdown levels
- EUR/USD drops back to 1.02
- Gold’s haven demand questioned after a 30-point selloff on Monday
US Dollar Index: 3-Day Time Frame – Log Scale
Source: Tradingview
The US Dollar Index surged as trade war inflation risks intensified, with Trump pushing for 25% tariffs on Canada and Mexico, 10% tariffs on energy imports, and 10% tariffs on Chinese goods, all set to take effect on Tuesday. Additionally, Trump has pledged new tariffs on the EU, which is preparing to retaliate alongside Canada, while a last-minute deal remains probable.
As the DXY nears 110, currency markets have been rattled, particularly the euro, which has dropped toward 1.02, raising the risk of parity. If no trade agreements are reached by Tuesday, inflation concerns and trade war risks could dominate the market outlook for the weeks ahead.
Markets Brace for Volatility Amid Economic & Trade War Risks
Aside from trade tensions, several economic indicators are set to impact markets this week:
- Monday: US ISM Manufacturing PMI (49.3) – Near a 10-month high but still below the expansion threshold (50)
- Wednesday: US ISM Services PMI (54) – Firmly in expansion territory, though it carries slight inflationary risks
- Friday: US Non-Farm Payrolls (NFP) Report – The latest NFP report surged to an 8-month high, adding 256K jobs, increasing inflation concerns alongside Trump’s trade policies.
Haven Shifts: Tech, Precious Metals, or the US Dollar?
The precious metals and tech sectors experienced record momentum in 2024, surging to fresh highs quarter after quarter, alongside Middle East conflicts. However, in 2025, the battlefield has shifted to trade, putting pressure on both tech and metals. Unlike the fragile tech sector, gold remains a reliable inflation hedge and safe-haven asset, though it faced a setback from the US dollar’s surge during Monday’s market open. Despite this dip, gold’s haven appeal is expected to persist amid ongoing inflation risks and trade uncertainties.
EURUSD Forecast: 3-Day Time – Log Scale
Source: Tradingview
After retesting the mid-channel zone at 1.0520 resistance, EUR/USD retraced sharply toward 1.02, pressured by trade war risks. The pair now hovers above its final support zone before parity at 1.1070. Beyond Trump’s impact, this week’s US economic indicators (ISM & NFP) could either reverse or intensify market volatility. EURUSD key scenarios:
Bullish Outlook:
Short-term resistance levels: 1.0340, 1.0430, 1.0520
Long-term resistance levels: 1.0620, 1.0700, 1.0850
Bearish Outlook: A firm close below 1.0070 could extend losses toward parity and deepen further to 0.99.
Gold Forecast: 3-Day Time Frame – Log Scale
Source: Tradingview
Gold declined nearly 30 points from its record highs on Monday, pressured by trade war risks. However, it is currently trading back near 2800, with safe-haven demand expected to persist amid inflation fears. The only potential game-changer would be a last-minute trade deal easing inflation concerns for 2025.
Gold Key Scenarios:
Bullish Outlook: A sustained move above 2820 could extend gains to 2920 and 3000.
Bearish Outlook: A close below 2730 could trigger declines toward 2620, 2570, and 2520.
Written by Razan Hilal, CMT
Follow on X: @Rh_waves
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