- EUR / USD edges below 1,1300 while the US dollar is strengthening after the Fed said it was not in a hurry to reduce interest rates.
- President Trump is expected to unveil a bilateral trade agreement on Thursday in the United Kingdom.
- The EU releases countermeasures against American prices to compensate for their costs.
Thursday, EUR / USD ticks are less than 1,1300 during European negotiation hours. The main currency pair stops like the US dollar (USD) is slightly negotiated above the signals Federal reserve (Fed) that there is no precipitation to reduce interest priceWho came Wednesday just after the central bank left interest rates unchanged in the range of 4.25% to 4.50% for the third consecutive time. The US dollar index (DXY), which assesses the value of the greenback against six main currencies, draws more at 100.00.
The president of the Fed, Jerome Powell, “said that” uncertainty prospects has increased again “due to the benefits of the prices announced by American president Donald Trump, who biased “The risks for inflation and unemployment upwards”. Therefore, Powell said that the right thing for the Fed now is “to wait more clarity”.
According to the CME Fedwatch tool, merchants are convinced that the Fed will also maintain stable borrowing rates during the June political meeting, but see around 66% of the interest rate of interest in current levels in July.
Meanwhile, investors are awaiting the announcement of the first bilateral trade agreement by the White House under the direction of the US President Trump. Trump on Wednesday said through an article on Truth. Social that his team concluded an agreement with one of its commercial allies, which will be public on Thursday. According to a report from the New York Times (NYT), the trading partner will be the United Kingdom (United Kingdom). This contradicts what Trump reported last week on the newspaper's television network that India, South Korea and Japan would be the first countries to conclude trade agreements.
However, financial market players are mainly focused on trade discussions between the United States and China, which is scheduled for Switzerland on Saturday. The American secretary of the Treasury, Scott Bessent and the commercial representative, Jamieson Greer, confirmed that they would meet their Chinese counterparts, aimed at defusing the trade war.
Daily Digest Market Movers: EUR / USD ticks below, the EU reveals countermeasures for American prices
- The EUR / USD is slightly down as the US dollar increases. Although investors supported the USD against the Euro (EUR), the latter surpasses the majority of peers.
- However, its advantage should remain limited as The European Central Bank (ECB) should continue the monetary expansion cycle more. Merchants are increasingly convinced that the ECB will again reduce interest rates at the June meeting.
- ECB officials have shown concerns about the Euro zone Economic perspectives, while remaining confident that inflation will return to the objective of the central bank of 2% by the end of the year.
- Meanwhile, the European Union commission (EU) has launched a public consultation document which contains possible countermeasures in response to UNITED STATES (US) Prices. The document shows countermeasures by up to 95 billion euros in American imports if commercial negotiations fail to provide a satisfactory result for the block, which is just under 100 billion euros reported Tuesday by Bloomberg.
- The European Commissioner on Trade Maros Sefcovic already declared on Wednesday that the committee would announce countermeasures to compensate for the cost that American prices on the continent “, tomorrow we will announce the next preparatory steps, both in the field of any rebalancing measures, as well as in important areas for additional discussions,” Sefcovic said. However, he said that the most important priority on the continent is commercial negotiations with the United States, but not at all costs.
Technical analysis: oscillates EUR / USD around the 20 -day EMA
Thursday, EUR / USD is less than 1,1300. The pair continues to contain the 20 -day exponential mobile average (EMA) around 1,1260.
The 14-day relative resistance index (RSI) is inside the beach of 40.00-60.00, indicating that the bullish momentum is concluded for the moment. However, the upward bias still prevails.
By raising the eyes, the psychological level of 1,1500 will be the main resistance of the pair. Conversely, the September 25 summit of 1.1214 will be a key support for Euro Bulls.
FAQ Nourished
In the United States, monetary policy is shaped by the Federal Reserve (Fed). The Fed has two mandates: reach price stability and promote full employment. Its main tool to achieve these objectives is to adjust interest rates. When prices are increasing too quickly and inflation is greater than the 2% target of the Fed, it increases interest rates, increasing borrowing costs throughout the economy. The result is a stronger US dollar (USD) because it makes the United States a more attractive place for international investors to park their money. When inflation falls below 2% or the unemployment rate is too high, the Fed can reduce interest rates to encourage the loan, which weighs on the greenback.
The Federal Reserve (Fed) organizes eight political meetings per year, where the Federal Open Market Committee (FOMC) assesses the economic conditions and makes monetary policy decisions. The FOMC is assisted by twelve officials of the Fed – the seven members of the Council of Governors, the president of the Federal Reserve Bank of New York and four of the eleven presidents of the remaining regional reserve bank, who have a period of one year on a rotating basis.
In extreme situations, the federal reserve can use a policy called quantitative relaxation (QE). QE is the process by which the Fed considerably increases the credit flow in a blocked financial system. It is a non -standard political measure used during crises or when inflation is extremely low. It was the Fed's weapon of choice during the great financial crisis in 2008. It implies the Fed Print more dollars and use them to buy high -level bonds from financial institutions. QE generally weakens the US dollar.
The quantitative tightening (QT) is the opposite process of the QE, by which the Federal Reserve ceases to buy obligations from financial institutions and does not reinvest the main obligations which it holds at maturity, to buy new obligations. It is generally positive for the value of the US dollar.
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