empty
20.08.2024 12:52 AM
The Higher the Euro Goes, the More Cautious It Becomes

Everything is relative. If inflation is no longer of particular interest to financial markets, they have focused on the recession, but for politicians, it still is. Donald Trump continuously criticizes the Democrats for high inflation. It must be acknowledged that the Republican has a point—prices did indeed soar in 2022 and 2023. However, the former President's promises to bring them down to the level of a grain of sand are not very credible.

Trump's plan involves increasing oil production, which would then affect gasoline prices, save Americans money, and allow them to invest elsewhere. However, in reality, energy prices no longer have the significant impact on the CPI that they once did. Combating inflation requires something else—something that monetary policy from the Federal Reserve can influence.

Dynamics and Structure of American Inflation

This image is no longer relevant

Thus, if Trump intends to increase oil production while simultaneously pressuring the Federal Reserve to sharply lower interest rates, nothing substantial will result. Meanwhile, Fed Chair Jerome Powell and his team are preparing to announce the start of a monetary easing cycle in September, with Jackson Hole as the ideal venue for this announcement.

The market already expects the Fed to begin easing its monetary policy within the first month of autumn. Therefore, if Powell refuses to give hints, we should anticipate US stock indices and EUR/USD sell-offs. The only leverage the bears have on the main currency pair is the silence of the Fed chair and concerns about Trump coming to power.

Despite the weakness of the eurozone economy, positive developments elsewhere, including in the UK, Japan, China, and the US, extend a helping hand to the euro as a pro-cyclical currency. It reacts sharply to the recovery of the global economy, even if led by the US. I don't think the European business activity figures will significantly deviate from Bloomberg's expert forecasts in a way that would negatively impact EUR/USD. Minor discrepancies allow for purchasing the main currency pair on price dips.

This image is no longer relevant

Another important event of the week will occur at the midpoint of the week, in addition to Jackson Hole and the release of the Eurozone PMI data. This concerns the release of the minutes from the July FOMC meeting. At that meeting, the Fed decided to keep the federal funds rate at a plateau of 5.5%, but a change in rhetoric caused investors to become concerned. What exactly did the central bank mean? Investors will try to extract the answer from the minutes.

Technically, the long positions formed from the 1.1 level in EUR/USD appear shaky on the daily chart. A rebound from the pivot levels at 1.1065 and 1.1110, or the bulls' inability to hold the upper boundary of the fair value range of 1.0845–1.1040, will be grounds for selling.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
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

100 Days of Trump's Presidency

While the dollar prepares for key economic data that could determine the Federal Reserve's next course of action, Donald Trump reflected on his first 100 days as President

Jakub Novak 13:31 2025-04-30 UTC+2

USD/CAD: The Pair Consolidates Under Pressure

USD/CAD is showing sideways movement, with spot prices currently trading around the 1.3840 level. The decline in crude oil prices to a three-week low, amid concerns that a full-scale trade

Irina Yanina 13:26 2025-04-30 UTC+2

Canadian Dollar Preparing for a Breakout

Retail sales in Canada fell by 0.4% month-over-month in February but rebounded in March with a strong increase of 0.7%. On a year-over-year basis, retail sales declined to 4.7%

Kuvat Raharjo 13:09 2025-04-30 UTC+2

Stable Inflation to Support the Australian Dollar

Inflation in Australia remained steady at 2.4% year-over-year in Q1, defying expectations of a slight slowdown to 2.2%. The quarterly increase of 0.9% also exceeded forecasts, while core inflation slowed

Kuvat Raharjo 13:03 2025-04-30 UTC+2

U.S. GDP and PCE Data Unlikely to Drastically Shift Market Conditions (Possible Resumption of #NDX and #SPX Growth)

Markets are already fatigued by the chaos unfolding in Donald Trump's mind and among his followers. Everything remains extremely unclear, so market participants are now fully focused on today's important

Pati Gani 09:48 2025-04-30 UTC+2

The Market Hears What It Wants to Hear

How far will greed carry the crowd? The late April rally in the S&P 500 somewhat sweetened the bitter pill for Donald Trump. His first 100 days in office have

Marek Petkovich 09:23 2025-04-30 UTC+2

What to Pay Attention to on April 30? A Breakdown of Fundamental Events for Beginners

A considerable number of macroeconomic events are scheduled for Wednesday, but we doubt they will have any meaningful impact on currency pair movements. The market continues to ignore most macroeconomic

Paolo Greco 06:28 2025-04-30 UTC+2

GBP/USD Overview – April 30: The Illusion of U.S. Democracy and Trump's Impeachment

The GBP/USD currency pair saw a slight downward correction after Monday's rise, which came out of nowhere. However, it's difficult to call this minor move a "dollar recovery." The U.S

Paolo Greco 03:29 2025-04-30 UTC+2

EUR/USD Overview – April 30: The Main Mystery of 2025 Revealed

The EUR/USD currency pair continued trading within a narrow range on Tuesday, showing relatively low volatility. In reality, 80 pips per day is not a bad volatility level

Paolo Greco 03:29 2025-04-30 UTC+2

NZD/USD: Bullish Prospects Amid Uncertainty

Although the past week was completely uninformative regarding fundamental indicators, it allowed adjustments to forecasts on economic growth, inflation, and the Reserve Bank of New Zealand's policy strategy based

Kuvat Raharjo 00:43 2025-04-30 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.