FOREX Fundamental analysis for EUR/USD on July 17, 2024
Donald Trump has not yet assumed the presidency, but is already exerting influence on the Fed, threatening to fire Jerome Powell if he lowers rates before the election. The former president would like to see the Fed as an obedient instrument, which contradicts its independence. Despite this, investors are actively buying EUR/USD in anticipation of an early easing of monetary policy in the United States.
After Goldman Sachs announced its readiness to ease policy in July, Bank of America also called for a reduction in the federal funds rate in September, November and December, which will weaken the US dollar. Therefore, investors are rushing to get rid of it.
It is noteworthy how EUR/USD reacted to the retail sales data. Contrary to the forecast of a decrease of 0.4%, the indicator remained at zero, and previous data were revised upward. This indicates stable consumer demand and the US economy, which initially caused the pair to sag.
Nevertheless, the desire to get rid of the dollar worked. EUR/USD did not even reach support at 1.086, as buyers became more active. A neutral speech by FOMC member Adriana Kugler did not change the situation. She believes that with a stable labor market, slowing inflation will allow the Fed to lower rates by the end of the year. Perhaps Trump has found a replacement for Powell?
Earlier, the 45th president of the United States called Powell America's enemy No. 1, and this may happen again. According to the IMF, new import tariffs will accelerate inflation and force Central banks to keep rates high for longer than expected. Trump, who plans to raise duties on all Chinese imports to 60%, will certainly put pressure on Powell to ease monetary policy.
The IMF slightly improved the forecast for Eurozone GDP for 2024 from 0.8% to 0.9%, reducing it for the United States from 2.7% to 2.6%. In 2025, the gap will narrow even more: the Eurozone economy will grow by 1.5%, and the American economy by 1.9%. This creates conditions for the continued growth of EUR/USD, unless Trump intervenes in forex currency trading.
The weakness of the EUR/USD sellers allows us to expect further growth of the pair in the direction of 1.10-1.11. We continue to adhere to the "bullish" forex trading strategy.