Forex Review. The dollar is advancing, Trump is always retreating – ForexNews.PRO
I couldn’t sell America, so I’ll have to retrain as a TACO fan. Events in the markets are happening so fast that my head is spinning. Previously, it took weeks to switch to “Trump always backs down” trade, but now one working day is enough. On Friday, after the close of trading, the US president wrote about the introduction of 100% tariffs, on Sunday he noted that everything would be fine with China. And on Monday, Scott Bessent said that duties would not necessarily be introduced.
The US stock indexes opened the week with a gap up, and it became clear that there would be no repeat of the April story. Then the USD index fell by 4% due to the imposition of tariffs on America’s Liberation Day. This pattern and the surfaced theme of “sell everything American” pushed the EURUSD above 1.16. The music on the euro street did not last long.
Mizuho Bank notes that there were a lot of bullish bets on the US dollar in those days. It was believed that trade wars would strengthen the greenback due to accelerating inflation and keeping the Fed’s interest rate at a high level. In fact, the central bank is ready to ignore the acceleration of consumer prices. He is more concerned about the cooling of the labor market. However, the “bears” on the EURUSD benefit even from monetary expansion.
Wall Street Journal experts have left the chances of a recession in the United States over the next 12 months at 33%. They expect GDP to expand by 1.7%. Experts surveyed by Bloomberg put an even higher figure at 1.8%. They predict only one act of monetary expansion in 2025, not two, like the futures market. According to
Standard Chartered, EURUSD will fall to 1.13 as derivatives begin to reduce the expected scale of monetary policy easing.
The US dollar ignores the “dovish” speeches of FOMC officials. According to Christopher Waller, the US labor market is weak. That’s all you need to know to further reduce rates. The new president of the Federal Reserve Bank of Philadelphia, Anna Paulson, believes that as long as inflation expectations are fixed, price increases due to supply-side effects do not turn into an inflation problem. She expects two acts of monetary expansion before the end of the year.
But the difficulties of the euro have not disappeared. Newly appointed French Prime Minister Sebastian Lecarnu will address the National Assembly for the first time. The parliament has already dismissed two of his predecessors and is threatening to do the same with the new head of government. The chances of early elections are growing, and with them the pressure on the euro.
In my opinion, the red line for EURUSD is 1.1585. If the bulls manage to cling to it, it will be possible to increase the longs formed from 1.1545. If it doesn’t work out, you should move on to sales.
