FOREX Fundamental analysis for EUR/USD on July 15, 2024
The question of whether EURUSD buyers have time is becoming relevant. While they are wondering why the Fed is waiting until September, the assassination attempt on Donald Trump is making adjustments to forex currency trading it was assumed that political instability would begin in the fall, but shots at the Republican and Trump's spectacular behavior at the time of the assassination could revive the US dollar much earlier.
Donald Trump is showing excellent political form. Not many 78-year-old men would be able to get out of the situation so effectively after being injured. His ratings are rising, and with them the yield of Treasury bonds is strengthening, and the dollar Market reaction resembles the situation after the first presidential debate.
The prospects of a November Trump victory and possible Republican dominance could accelerate inflation. New tariffs and trade wars will disrupt supply chains and, for sure, raise prices. Additional fiscal incentives, likely approved by the Republican Congress, will also contribute to this scenario. Rising inflation will keep the Fed from cutting rates, which will raise Treasury yields and strengthen the dollar's position.
The situation was going well for the Fed. The cooling of the labor market and the reduction of inflation to the lowest levels of the last three years opened the way for monetary policy easing. The probability of a rate cut in September is 92%, and investors are wondering why they have to wait so long? This is reminiscent of the end of 2023, when the Fed's "dovish" reversal with the projected three acts of monetary expansion in 2024 collapsed the dollar.
The EURUSD's rise to 1.091 in recent weeks has been supported by expectations of a rate cut. The statement by the president of the Federal Reserve Bank of Chicago, Austan Goolsby, that the Fed has waited too long, underscores the need to normalize monetary policy.
If the ECB does not hint at a reduction in the deposit rate in September at the July meeting, and American retail sales disappoint, EURUSD may soar to 1.1. But! The Trump factor remains a key obstacle for dollar sellers. Increased volatility awaits the main currency pair, and testing previously set targets at 1.09 and 1.0935 may be a signal for profit-taking.
US retail sales data and Canadian inflation report (Tuesday, 15:30). UK Inflation Report (Wednesday, 09:00). The Australian Labor Market report and the European Central Bank meeting (Thursday, 04:30 and 15:15).