Forex analytics. The dollar makes a stop – ForexNews.PRO
Divide and conquer! It is unknown whether Donald Trump will be able to achieve a reduction in the federal funds rate to 1%, but he has already taken the first step. Never in the history of the FOMC has it been divided like it is now. As soon as John Williams, President of the Federal Reserve Bank of New York, said that rates could fall in the near future, the futures market increased the chances of cutting them in December from 28% to 67%! This allowed the EURUSD bulls to launch a counterattack.
You can’t believe anything. As soon as investors convinced themselves that the lack of data would force the Fed to pause the cycle of monetary expansion, the doves raised their heads. The December FOMC meeting is sure to be a rehearsal for the performances that will take place in 2026. At the end of the year, Jerome Powell risks getting at least three dissenters. No matter what verdict the Fed makes.
Next year, the total number of dissidents is capable of setting a record, which is in the hands of Donald Trump. By gradually introducing his people into the FOMC, the president can achieve the dominance of the “doves” and eventually aggressive rate cuts. This is extremely sad news for the US dollar.
The chorus of the Fed’s hawks is still strong. The president of the Federal Reserve Bank of Boston, Susan Collins, believes that there is no urgency in easing monetary policy. Financial conditions create a tailwind, not a headwind, for inflation and GDP. Indeed, Wall Street Journal experts believe that the American economy will accelerate to 3% in the third quarter.
Nevertheless, such authorities as Christopher Waller, John Williams, and Jerome Powell himself are on the side of the “pigeons”. They prefer the need for preventive maintenance of the labor market and call the surge in inflation due to tariffs a temporary phenomenon. White House mutt Stephen Miran should not be discounted either, who will continue to shake the FOMC with his barking.
Thus, the transition of the futures market from a state of complete confidence in a pause in the cycle of monetary expansion to the topic of a rate cut in December stopped the victorious march of the “bears” on the EURUSD. Moreover, the statistics on European business activity extended a helping hand to the euro.
According to Hamburg Commercial Bank, thanks to the services sector, the economy of the currency bloc should grow faster in the fourth quarter than in the third. Increased investments in infrastructure and the defense industry will allow GDP to accelerate in 2026.
