US Dollar Weekly Outlook 2025: Is King Dollar Losing Its Crown?

The US dollar has long held its reign as the world’s reserve currency and go-to safe haven. But as we move into April 2025, a wave of uncertainty driven by political risks, monetary policy questions, and global rebalancing is casting doubt on the greenback’s strength. Forex markets are now re-evaluating the dollar's dominance, and traders are adjusting their positions across major pairs like EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY, USD/CHF, and USD/CAD.

Why the Dollar is Under Pressure

Since Donald Trump’s return to the White House, markets have been on edge. His policies—from renewed trade wars to expansive fiscal stimulus—are raising alarm bells globally. There is growing concern that the USD is becoming less reliable as a haven, especially with increasing fears that the Fed might pull back its critical dollar swap lines.

Volatility Index: Risk-Off?

With VIX gaining traction, risk-Off sentiment is back after the fear gauge bounce off the 19 level and reaching the 22.80 level for renewed fear looming in the markets.

US10-Year Government Bonds

With fears on the rise, US-10 Government Bonds are also getting attractive to investors as it gains traction amidst risk-off sentiment surrounding the US market.

Trade War Escalation

On April 2, 2025, President Donald Trump is set to implement a series of tariffs under what he terms "Liberation Day," aiming to address perceived unfair trade practices and promote domestic manufacturing. These measures include a 25% tariff on all foreign-made vehicles, expected to increase the average cost of imported cars by $5,000 to $10,000. Trump has expressed indifference to potential price hikes, emphasizing a focus on boosting American-made car purchases.

US Facing Debt Ceiling

Meanwhile, the Congressional Budget Office reiterated that the U.S. is facing a potential debt ceiling crisis by August 2025 if Congress fails to act. The fiscal deficit is already projected to exceed $1.9 trillion this year—a record outside of pandemic levels.

Federal Reserve Independence

On the monetary front, there’s growing unease surrounding the independence of the Federal Reserve. European central banks have reportedly begun scenario-planning in case the Fed's global dollar swap lines become politicized, especially after Trump hinted at using the Fed as a "strategic instrument" during interviews on conservative media outlets.

Key Drivers of Dollar Weakness:

• Aggressive U.S. trade policies and new tariff proposals
• Expanding U.S. deficit (>$1.9 trillion projected for 2025)
• Questions around Federal Reserve independence and liquidity backstops
• Global shift away from USD-dominated reserves
• Rising appetite for geopolitical and monetary diversification

Additional Narrative Themes:

• De-dollarization Trends: Several emerging markets have increased bilateral trade in local currencies, including Brazil-China, and India-Russia trade deals, limiting the necessity for USD settlements.
• Gold Resurgence: Gold prices have climbed above $3085/oz as of March 29, 2025.

Institutional Rebalancing: Sovereign wealth funds and pension institutions are trimming USD exposure and shifting allocations toward the euro, yen, and emerging markets.

Key Market Drivers This Week

USD Technical Outlook

With Dollar’s failure to hold its ground, the technical analysis is supporting the fundamental idea of dollar’s weakness.

Weekly

Dollar was not able to sustain its move last week after reacting bearishly on the weekly fair value gap.

Despite potential reversal, Dollar has not picked up enough steam for a renewed strength to the upside.

Daily

Daily is still hovering below the moving averages with price currently testing the 103.944 - 103.759 level.

4-Hour

Potential breakdown scenario for Dollar once price reacts bearishly at the 104.137 - 104.203 level.

If we get a successful rejection, we could see a favor on foreign currencies:

Upside Potential

• EURUSD
• GBPUSD
• AUDUSD
• NZDUSD
• XAUUSD/GOLD

Downside Potential

• USDCAD
• USDCHF
• USDJPY

“The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses.”

— Ed Seykota, trading legend and systems pioneer

In volatile markets, your biggest edge isn’t your analysis—it’s your ability to protect capital. Ed Seykota’s quote, repeated for emphasis, is a blunt reminder that survival is the first rule of trading. Cutting losses isn't just a tactic—it's the core philosophy of long-term success. Risk management is KING.

This week, traders are facing a market filled with uncertainty:

• The US dollar is weakening under pressure from political instability, fiscal dysfunction, and Fed credibility concerns.
• Safe-haven flows are lifting the Japanese yen and Swiss franc.
• Risk-sensitive currencies like AUD and NZD are bouncing as sentiment flips intraday.

Actionable Takeaways Based on Seykota’s Quote

1. Cut Fast, Stay Liquid

• Exit the moment your trade idea is invalidated—don’t negotiate with price.
• Be okay with being wrong quickly. Small losses are tuition.

2. Trade Smaller in Unstable Environments

• Volatility exaggerates both gains and losses. Scale down to survive the chop.
• Reduce size ahead of Friday's NFP or other key macro releases.

3. Prioritize Process Over Outcome

• Your job is to follow your rules, not predict the future.
• If your system says exit—do it, even if it feels uncomfortable.

4. Review Stop Zones Before You Click Buy

• Place your stop where your thesis dies—not where you feel safe.
• Reward-to-risk only matters if you can survive the loss.

Final Word

Seykota’s wisdom is brutal and brilliant. If you internalize just one thing this week, let it be this: Good trading isn’t about being right—it’s about managing risk when you’re wrong. With the dollar on shaky ground and safe-havens flashing strength, now’s the time to sharpen your discipline, not widen your stops.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.