empty
14.07.2025 12:42 AM
The Dollar Is Becoming a Risk Currency

This image is no longer relevant

In my reviews, I've regularly noted that the decline in demand for the U.S. dollar is not just a matter of price depreciation. We're talking about a currency that for many years was considered the global standard. While the dollar remains the world's primary medium of exchange, its position has significantly weakened in 2025.

I won't repeat the obvious reasons why the dollar is falling. Instead, I'll focus on what this could lead to. The demand for the U.S. dollar is dropping not only in the foreign exchange market, where few expect it to strengthen, but also, therefore, few are buying it. The demand is falling globally. This is partly because the currency itself is depreciating. And partly because Donald Trump's policies are turning it from a safe-haven currency into a risk asset. Now let's ask ourselves: what kind of currency would everyone prefer to deal with? One that is risky and depreciating, or one that is safe and stable? The answer is obvious.

Goldman Sachs made a similar statement recently: the dollar is starting to show signs of becoming a risk currency. Bank economists note that the pressure on the dollar comes not so much from Trump's tariffs, but from the economic and political uncertainty surrounding the U.S., the instability of the American government's course, and the shift of investor assets away from the U.S. The last point is particularly interesting in light of new highs on the stock market. That is, American companies' shares are in demand, but international investors are trying to keep their distance. What does that suggest? It means the U.S. stock market is growing due to domestic demand, from Americans themselves, many of whom are buying domestic stocks because they don't have access to foreign securities, or don't want to deal with them.

This image is no longer relevant

In the U.S., investing is much more widespread than in many countries, so even a farmer named John in Texas might own several dozen Apple shares. It is precisely these "farmers" who are creating the demand, while foreign investors prefer to redirect their capital elsewhere.

In general, the outlook for the dollar is, at best, uncertain. The U.S. stock market may continue to grow on the back of domestic demand, but U.S. bonds—on the contrary—are struggling, even due to low internal confidence in the Trump administration. Trump may become the starting point for the global de-dollarization process, and if that process begins, not even Trump will be able to stop it. What can the U.S. president do—raise tariffs ten more times?

Wave Pattern for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues to form an upward section of the trend. The wave structure still entirely depends on the news background related to Trump's decisions and U.S. foreign policy, and there are still no positive changes. The targets of this trend section may extend as far as the 1.25 level. Therefore, I continue to consider buying with targets near 1.1875, which corresponds to the 161.8% Fibonacci level. A corrective wave set is expected in the near future, so new euro purchases should be made after this corrective structure is completed.

This image is no longer relevant

Wave Pattern for GBP/USD:

The wave structure of the GBP/USD instrument remains unchanged. We are dealing with an upward, impulsive section of the trend. Donald Trump, the markets may face many more shocks and reversals, which could seriously affect the wave picture, but at the moment, the main scenario remains intact. The targets of the upward trend section are now located near 1.4017, which corresponds to the 261.8% Fibonacci level of the presumed global wave 2. It is assumed that a corrective wave set has begun. Classically, it should consist of three waves.

Main Principles of My Analysis:

  1. Wave structures should be simple and clear. Complex structures are difficult to interpret and often lead to changes.
  2. If you're not confident in what's happening in the market, it's better not to enter.
  3. Absolute certainty in the direction of movement does not and cannot exist. Don't forget protective Stop Loss orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.
Chin Zhao,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Alexander Dneprovskiy
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is attempting to attract buyers. Despite the European Central Bank's decision on Thursday to leave interest rates unchanged, the euro is facing headwinds due to ongoing

Irina Yanina 13:20 2025-07-25 UTC+2

No Unity of Opinion Within the ECB Yet

Yesterday, the European Central Bank kept interest rates unchanged, citing risks stemming from the trade war with the U.S., the strong euro, and rising government spending. According to Governing Council

Jakub Novak 11:59 2025-07-25 UTC+2

ECB Leaves Rates Unchanged

Yesterday, many were watching how the European Central Bank would act under current conditions, as the economy still requires stimulus, but inflationary risks prevent further easing. Following the meeting, President

Jakub Novak 11:36 2025-07-25 UTC+2

The Market Has Chosen a Win-Win Strategy

The U.S. stock market has shaken off its fears completely. The VIX volatility index has plunged to its lowest level since early February, while the S&P

Marek Petkovich 11:15 2025-07-25 UTC+2

Will Trump Succeed in Forcing Powell to Do His Bidding? (Potential for a Bitcoin Decline and a Rise in #NDX)

The U.S. president is fully implementing his aggressive policy toward everyone and everything — both in foreign and domestic affairs. While his actions toward trade partners are more or less

Pati Gani 09:57 2025-07-25 UTC+2

What to Pay Attention to on July 25? A Breakdown of Fundamental Events for Beginners

There are relatively few macroeconomic reports scheduled for Friday, but all of them are quite important. In Germany, the IFO Business Climate Index will be released — the least significant

Paolo Greco 06:43 2025-07-25 UTC+2

GBP/USD Overview – July 25: No Sign of De-escalation Yet

On Thursday, the GBP/USD currency pair pulled back slightly, but this strengthening of the dollar has no real impact on the overall picture. The British pound has corrected in recent

Paolo Greco 04:17 2025-07-25 UTC+2

EUR/USD Overview – July 25: The ECB Meeting Did Not Change the Balance of Power Between the Dollar and the Euro

The EUR/USD currency pair continued to move upward on Thursday. There were several macroeconomic events scheduled for the day, and they did provoke a small market reaction

Paolo Greco 04:17 2025-07-25 UTC+2

EUR/USD: ECB's "Hawkish Pause" and Conflicting Macroeconomic Reports

The results of the ECB July meeting provided slight support for the euro. However, contradictory macroeconomic reports and anticipation of the outcome of the US-EU negotiations played a restraining role

Irina Manzenko 00:50 2025-07-25 UTC+2

The Euro Outsmarted the "Bears"

There was no "sell the fact" reaction. One of the reasons behind the recent EUR/USD rally was the expectation that the deposit rate would be held at 2% following

Marek Petkovich 00:50 2025-07-25 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.