Forex analytics. The dollar learns from its mistakes – ForexNews.PRO
First the tariffs, then the shutdown. It seems that financial markets are doomed to step on the same rake. Repetition is the mother of learning. The shooting in Minneapolis sent Democrats into a frenzy. Even those who opposed the government shutdown in the fall are criticizing Donald Trump for his anti-immigration policy. The repetition of that story adds fuel to the fire of the EURUSD rally.
Republicans have a 53-seat majority in the Senate against 47, but 60 seats are needed to avoid a shutdown. Before Minneapolis, the issue of extending the government’s term of office until September seemed resolved. However, the killings of Americans and protests have forced Democrats to demand a separate review of the issue of funding the Department of Homeland Security. As a result, the chances of a shutdown after January 31, according to Polymarket, jumped to 78%.
As in the case of tariffs, investors have a completely fresh template. It can be used in EURUSD trading. In September, on the eve of the previous government shutdown, there was a lot of talk that it would slow down economic growth in the United States. Examples of previous cases were given. In 2018-2019, the shutdown lasted 34 days, resulting in the dismissal of 340 thousand employees and a decrease in GDP by 0.4 percentage points in the first quarter of 2019. 16 days in 2013 cost the United States the loss of 800 thousand jobs and -0.6 percentage points to GDP.
Such parallels led to an increase in the EURUSD. However, then the situation turned upside down. Investors felt that the government shutdown would increase the risks of a prolonged pause in the Fed’s monetary expansion cycle. This played into the hands of the US dollar. There was no actual slowdown in US GDP. But the central bank did not suspend the process of lowering the rate against the background of a decrease in employment growth.
Now, even without a shutdown, he is in the “let’s sit and see” mode, the labor market has stabilized, and the economy is strong as a bull. The confirmation is the rise in orders for durable goods to semi-annual highs.
Will investors pay attention to the shutdown? If the previous example showed that even the longest, 43-day shutdown of the US government made no impression on either the economy or the dollar. It is likely that Donald Trump has calmed down for a while, and the markets need a new topic. As a result, the EURUSD risks rising a little more before the end of January, and then it will rush down.
