Forex analytics. The dollar gave free rein to emotions – ForexNews.PRO
Markets are ruled by emotions. Well, Donald Trump said that the fall of the US dollar is great, so what? As if no one knew before that that the White House supports devaluation. Everyone knew, but all this mouse fuss about the coordinated currency intervention of the United States and Japan, the historical parallels with the Plaza Accord forced investors to massively dump the greenback. The crowd did not want to miss the acceleration of the EURUSD uptrend. Now investors are sitting and scratching their heads, aren’t they in a hurry?
The markets are so confused about the policy of the White House that they perceive the very likely appointment of Kevin Warsh to the post of Fed chairman as an excuse to buy the US dollar. They say that in the past, the ex-FOMC governor acted as a “hawk”. Ladies and gentlemen, wake up! If this person supported the idea of a long pause in the cycle of monetary expansion, he would not be Donald Trump’s favorite, according to betting markets.
Moreover, the president once again couldn’t contain his anger and expressed dissatisfaction with the Fed’s passivity in January. According to him, due to the huge amount of money coming into the country from tariffs, the United States should have the lowest rate in the world! It must be 2, no 3 points lower than it is now! Appetite, of course, comes with eating, but what about Switzerland? She has zero at all.
It is quite possible that Kevin Warsh’s appointment is part of a game to get Candidate Trump through Congress. There, outraged by the Justice Department’s lawsuit against Jerome Powell, Republicans refused to block any candidate. Warsh’s alleged “hawk” may be able to go through this meat grinder. And only then will he appear to the public as a “pigeon” that has not been seen since the days of the infamous Arthur Burns.
In my opinion, the markets need to calm down, get over their emotions and start asking themselves the right questions. Even if Donald Trump wants to weaken the US dollar and drop rates to 0.75%, what can he do? Decisions at the Fed are made collectively, and Lisa Cook is likely to retain her post. Moreover, it is highly likely that Jerome Powell will remain in the FOMC as governor. Otherwise, he would have shown that he had succumbed to political pressure.
I would buy a dollar. Just because sooner or later the markets return to their foundations. And the strength of the US economy and the passivity of the Fed are very serious trump cards. Almost jokers. Another thing is that it is difficult to say when exactly investors will move away from emotions, from FOMO or “buy or lose” in relation to EURUSD.
