Forex Analysis & Reviews: 25.04.2025 - The U.S. Dollar Rises

25.04.2025 11:31 AM

The U.S. Dollar Rises — Here's Why

The U.S. dollar strengthened against a number of global currencies, as did the U.S. stock market, following reports that the Chinese government is considering suspending its 125% tariffs on certain types of U.S. imports. This move appears to be a response to recent comments by President Trump, who said he is considering lowering some trade tariffs on China.

According to media reports, Chinese authorities are weighing the removal of additional duties on medical equipment and certain industrial chemicals, such as ethane. Officials are also discussing lifting tariffs on aircraft leases, as many airlines and carriers do not own all their planes and pay leasing fees to third parties for aircraft use.

The market's reaction to the potential exemption of some goods from duties was swift: the dollar gained ground against a number of risk assets, and global stock indices returned to a positive trajectory.

As previously noted, the exemptions China is considering mirror recent moves by the U.S., which excluded electronics from its 145% tariff on Chinese imports earlier this month. These kinds of concessions once again underscore how deeply interconnected the world's two largest economies are. Trade wars, tariff threats, and logistical shocks are disrupting business and sowing instability.

While the U.S. imports far more from China than vice versa, Beijing's actions highlight areas of its economy that still rely on American goods. Experts note that although China is the world's largest producer of plastics, some of its plants depend on ethane, which is primarily imported from the U.S. Chinese hospitals also rely on advanced U.S.-made medical equipment such as MRI machines and ultrasound devices.

It's clear the list of exemptions is still under development, and discussions may not move forward. Rumors suggest that Chinese firms in vulnerable sectors have received government requests to submit customs codes for U.S. goods they would like exempted from new tariffs.

According to Caijing, Beijing is also preparing to lift additional tariffs on at least eight categories of semiconductor-related products. These categories currently do not include memory chips, which could be a potential blow to Micron Technology Inc., the world's third-largest memory chipmaker.

Investors continue to look for signs that the two countries will cooperate on reducing tariffs, but relations still appear stalled. On Thursday, Chinese officials publicly demanded that the U.S. lift all unilateral tariffs before agreeing to any trade talks. President Donald Trump has attempted to contact President Xi Jinping since returning to office, but the Chinese leader has so far resisted, instead pushing for lower-level negotiations to shape an agreement.

As for the currency market, the reaction was also immediate. The dollar posted strong gains while risk assets fell sharply.

EUR/USD Technical Outlook

At present, buyers need to focus on reclaiming the 1.1390 level. Only then will a test of 1.1435 become realistic. From there, the pair could move toward 1.1490, though reaching that level without support from major players will be difficult. The most distant target remains the 1.1570 high. If the instrument declines, I expect major buying interest to emerge only around 1.1315. If that fails, it would be reasonable to wait for a retest of the 1.1260 low, or consider long positions from 1.1215.

GBP/USD Technical Outlook

Pound buyers need to reclaim the nearest resistance at 1.3310. Only then will a push toward 1.3365 become possible — a level that will be challenging to break. The most distant target remains the 1.3416 area. If the pair declines, bears will try to take control at 1.3250. A break of this range would deal a serious blow to bullish positions and push GBP/USD down to the 1.3205 low, with potential further movement toward 1.3165.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.