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Forex analysis and forecast GBPUSD for today, September 20, 2022

GBP/USD, currency, Forex analysis and forecast GBPUSD for today, September 20, 2022

On the eve of the meetings of the Bank of England and FOMC trading instruments, including GBP/USD are traded multidirectionally in narrow price ranges. On Tuesday buyers are trying to win out of the previous losses but don't demonstrate any significant activity.

The Bank of England is expected to raise its rate by 50 basis points to 2.25% on Thursday. This lags far behind the actions of the Fed, where the rate is raised at every meeting. Analysts expect U.S. federal funds costs to rise to 4.25-4.50% by the end of the year. On Wednesday, the FOMC is likely to announce a 75 basis point monetary tightening.

GBP/USD Technical Analysis

The Bollinger indicator on the daily TF has shifted horizontal.

The MACD indicator is in the negative range, but began to show signs of growth towards the zero line, preserving a sell signal.

The oscillator stochastic from the bottom up broke through the 20% boundary, came out of the oversold area and continues to grow.

Candlestick patterns, chart patterns and technical indicators do not give unambiguous signals for market entry.

GBP/USD Daily Chart Forex

Upon a confident breakdown of resistance at 1.1478, we form long positions with Take Profit at 1.1600. Stop-loss is set at 1.1404.

If it gets below 1.1404, we return to selling with Take Profit at 1.1300. Stop-loss is placed at 1.1410.

 

If you are interested in GBPUSD analytics, we recommend you to visit the analytics page, where you can find the latest analytics on Forex from top traders from all over the world. These analytics will be useful both for beginners and professional traders. The Forex signals service makes it much easier for beginners to make their first steps in trading on the market. The latest GBP/USD forecasts and signals contain support and resistance levels, as well as stop-loss levels.

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Financial market analysis on February 7, 2025
EUR/USD, currency, GBP/USD, currency, USD/JPY, currency, EUR/NOK, currency, Dow Jones, index, NASDAQ 100, index, S&P 500, index, FTSE 100, index, Financial market analysis on February 7, 2025 US employment data: what to expect?Today, the main attention of market participants is focused on the publication of the US employment report for January. Seasonally adjusted, growth in the number of jobs in the non-agricultural sector is projected to slow down to 150,000 (previous value: 256 thousand). Average hourly earnings are projected to increase by 0.3% mom, and the unemployment rate will remain at 4.1%.The University of Michigan's preliminary consumer confidence index for February will also be published. The volatility of this indicator in recent months is explained by the difference in views between optimistic Republicans and more cautious Democrats.Eurozone: Neutral interest rate analysisThe European Central Bank will present a report on a neutral interest rate, a level at which monetary policy has neither a stimulating nor a restraining effect on the economy. According to previous ECB estimates, this indicator was in the range of 1.5-2.0%, however, according to the latest data, it may be revised upward to 1.75-2.25%.Germany: industrial productionGerman industrial production data for December will also be released today. Investors hope to see signs of a slowdown in the recession, which was previously reflected in the dynamics of the purchasing Managers' Index (PMI).Sweden: Public Finance reportThe Swedish National Debt Office will publish data on the state of public finances for January 2025. In the previous two months, there was a significant deterioration in the indicators, which led to an increase in the need for borrowing by SEK 26 billion compared to November forecasts. Additionally, the latest data on real estate prices will be published.Economic newsUSA: slowing labor productivity growthIn the fourth quarter, labor productivity growth in the non-agricultural sector slowed to 1.2% (forecast: 1.4%, previous value: 2.3%). Although this indicator remains volatile, the growth rate has approached pre-pandemic levels (about 1%). This may indicate a structural slowdown in the economy, forcing companies to either shift rising wage costs into prices or reduce margins.United Kingdom: The Bank of England lowered the rateThe Bank of England lowered its key interest rate by 25 basis points to 4.5%, which was in line with market expectations. The decision was made by a majority vote (7-2), with the most hawkish member of the committee, Catherine Mann, voting for the reduction for the first time.Sweden: unexpected rise in inflationPreliminary data on inflation in Sweden (excluding energy) for January showed an increase of 2.7% yoy (forecast: 2.1%, previous value: 2.0%), which significantly exceeded market expectations and forecasts of the Riksbank. The final data will be published next week, and they will have an impact on further monetary policy decisions.Eurozone: retail sales declineRetail sales in the eurozone decreased by 0.2% mom in December (forecast: -0.1%, previous value: +0.1%), however, the annual growth was 1.9%. This raises questions about the prospects of consumer demand as the main driver of the region's GDP growth in 2025.Czech: interest rate reductionThe Central Bank of the Czech Republic lowered its key rate by 25 bps to 3.75%, despite the unexpectedly high inflation rate released earlier in the day. This confirms the regulator's commitment to easing monetary policy.Stock markets: investor optimismGlobal stock indexes ended the day with growth, and the MSCI World Index updated its historical maximum. The main drivers were positive corporate reporting and reduced volatility. The VIX index dropped to 15.5. European markets have shown strong momentum, with the German DAX up more than 10% since the beginning of the year.In the American market:• Dow Jones dropped 0.3%• S&P 500 rose 0.4%• Nasdaq added 0.5%• Russell 2000 lost 0.4%There is a mixed dynamic in Asia, with Chinese stocks leading the way in terms of growth.Bond markets and the foreign exchange marketDebt marketEuropean bond yields remained stable in anticipation of today's report on the US labor market. The Bank of England's decision to cut the rate by 25 bps had no significant impact on other markets.The foreign exchange marketToday, traders' main attention is focused on employment data in the United States. Main movements:• EUR/USD remains near 1.04• USD/JPY continues to decline below 152• GBP/USD dropped below 1.24 after the Bank of England's decision, but then recovered• The Swedish krona has strengthened due to unexpectedly high inflation• EUR/SEK decreased from 11.35 to 11.31• EUR/NOK fell from 11.70 to 11.64ConclusionsToday's macroeconomic data can be key triggers for market movements. The focus is on the US employment report and the revision of the neutral ECB rate. In the coming days, the dynamics of the currency and debt markets will depend on the interpretation of these data by market participants and their impact on the monetary policy prospects of the leading Central banks.
Feb 07, 2025 Read
General analysis and forecast for GBP/USD for today, February 7, 2025
GBP/USD, currency, General analysis and forecast for GBP/USD for today, February 7, 2025 The GBP/USD pair showed a slight decline during the Friday morning trading session, consolidating near 1.2425. Market activity remains low, as bidders prefer to refrain from new positions before the publication of the January report on the US labor market, which will be released today at 15:30 (GMT+2).Analysts predict that the number of new jobs outside the agricultural sector will decrease from 256.0 thousand to 170.0 thousand. The average hourly wage in annual terms may adjust from 3.9% to 3.8%, and in monthly terms will remain at 0.3%. The unemployment rate is likely to remain at 4.1%. These data indicate a slight slowdown in the labor market, but overall it remains resilient to the Fed's current monetary policy.The president of the Federal Reserve Bank of Chicago, Austan Goolsbee, warned that it would be a mistake to ignore potential inflationary pressures from higher trade tariffs. He referred to the experience of the COVID-19 pandemic and noted that the Trump administration's trade policy could lead to a more significant increase in consumer prices than in his first term.UK dataToday, British investors will pay attention to the January house price index from Halifax Bank Plc. The indicator is expected to grow by 0.2% on a monthly basis after a decrease of 0.2% in the previous month.In addition, the market is discussing the results of the last meeting of the Bank of England. As expected, the regulator lowered the interest rate by 25 basis points to 4.50%. Seven of the nine members of the Monetary Policy Committee supported the decision, while two favored a 50 basis point cut. The head of the Bank of England, Andrew Bailey, stressed that further decisions will depend on macroeconomic statistics and the general background.UK inflation continues to decline, reaching 2.5% in the fourth quarter. However, the regulator warned that the positive trend could be disrupted in the middle of the year due to rising energy and utility prices. Inflation is expected to return to the 2.0% target no earlier than the fourth quarter of 2027.Technical analysis of GBP/USD for todayOn the daily chart, the Bollinger indicator is attempting a horizontal reversal, which indicates a narrowing of the price range and a mixed trading pattern. The MACD indicator is declining, forming a new bearish signal. Stochastic, having retreated from the maximum values, turned down, which increases the likelihood of further decline in the short term.Trading recommendations- Short positions: can be considered after a confident breakdown down to the 1.2400 level with a target of 1.2300. It is recommended to set the stop loss at 1.2450.- The signal for purchases will be the return of bullish dynamics and an upward breakout of the 1.2450 level. The target will be 1.2550. We will place the stop loss at 1.2400.
Feb 07, 2025 Read
US Labor Market Analysis: key expectations and possible scenarios
US Dollar Index, index, US Labor Market Analysis: key expectations and possible scenarios Non-farm Payrolls on February 7, 2025. Expectations and risksAccording to the consensus forecast, 169,000 jobs should be created in the US non-agricultural sector in January. This will be a noticeable decrease compared to the December gain of 256,000 jobs. Overall, in 2024, the U.S. economy steadily created an average of 186,000 jobs per month, which indicates the strength of the labor market before the beginning of 2025.The unemployment rate is expected to remain at 4.1%, while wages will increase by 0.3% month-on-month and 3.8% year-on-year. However, the real employment rate may exceed forecasts, and experts estimate a range of possible outcomes from 175,000 to 225,000 new jobs.The key factor in evaluating data has traditionally been the average hourly wage. Any deviation from the range of 3.8–4.0% may affect inflation expectations, which, in turn, will affect the prospects for the Fed's monetary policy. If the wage data turns out to be higher than expected, this may force the Fed to maintain a cautious approach to lowering interest rates, which will lead to increased volatility in the US dollar.The current situation in the US labor marketThe US labor market is gradually slowing down. The December report showed a decrease in the number of open vacancies by more than 500,000, bringing their total volume to 7.6 million. The largest declines were recorded in professional services and healthcare, while the leisure and hospitality sector maintains steady demand for labor.Recruitment is slower, and layoffs in some industries are offsetting the number of new hires. Nevertheless, wage growth remains stable – over the past five months, the average wage level has been in the range of 3.9–4.0%, which indicates continued demand for labor.However, there are conflicting signals. The Manufacturing Employment Index (ISM Manufacturing Employment Index) rose to 50.3 in January, indicating a moderate expansion, while the ADP private sector report recorded employment growth of 183,000 jobs. Combined with geopolitical and trade factors, these data highlight the importance of the upcoming employment report.Possible scenarios and impact on marketsEmployment data will have a significant impact on the US dollar (DXY) and the general mood of financial markets.1. Strong report (over 190,000 new jobs)– The US dollar will strengthen, especially if the indicator turns out to be above 107.50, which is a support level.– Investors may reconsider expectations for a reduction in Fed rates, which will lead to an increase in bond yields.– The stock market may react cautiously, as high employment will increase inflationary risks and reduce the likelihood of aggressive policy easing.2. Weak report (less than 135,000 jobs, wage growth below 0.2%)– The likelihood of an accelerated Fed rate cut increases, which could weaken the dollar.– Stock markets, on the contrary, may receive support on expectations of monetary policy easing.Thus, the significance of the report goes beyond simple statistics – it will determine investor sentiment and market movement vectors in the coming weeks.Technical Analysis: US Dollar Index (DXY)At the moment, the dollar's bulls have failed to continue their growth: The index is showing the formation of a lower maximum, although it has not yet broken through key support levels.– The nearest support is at 107.00, followed by 106.13 and 105.76.– To continue the growth, the index needs to overcome the level of 108.00, and then the resistance at 108.49 and 109.52.The upcoming employment data will determine the further movement of the dollar: either an increase in corrective pressure, or a new round of growth with strong macroeconomic indicators.
Feb 07, 2025 Read
EUR/USD: the pair remains influenced by US policy
EUR/USD, currency, EUR/USD: the pair remains influenced by US policy FOREX Fundamental analysis for EUR/USD on February 7, 2025US Treasury Secretary Scott Bessent said that the White House administration is interested in a strong dollar, but does not support the actions of other countries aimed at weakening their currencies. These words indicate that the United States is striving for the stability of the dollar rather than for its further strengthening. This explains why the EUR/USD pair has entered a consolidation phase, despite the divergence in monetary policy between the Fed and the ECB. Even the US employment report is unlikely to significantly affect the current dynamics.Scott Bessent also noted that trade imbalances are partly related to exchange rates, which are influenced by monetary policy. Indeed, lowering interest rates has become almost the only tool to support economies involved in trade wars. In this situation, the United States finds itself in a winning position, while other countries have to weaken their currencies to mitigate the negative effects of Trump's tariffs.Changing the approaches of Central BanksTraditionally, central banks have tried to follow the Fed, acting synchronously. However, the situation has changed now. The Federal Reserve has suspended the cycle of monetary tightening, while other regulators are actively reducing interest rates. For example, the Bank of England has already done this and hints at a continuation, and Banxico (the Central Bank of Mexico) immediately lowered the rate by 50 basis points. Markets also expect the ECB to make 3-4 rate cuts before 2025.As a rule, such discrepancies in the policy of Central Banks would lead to a sharp strengthening of the dollar. However, the US administration is clearly interested in the stability of the exchange rate, which is holding back the growth of the USD index. In addition, Donald Trump's policies have a greater impact on the markets than the actions of the Fed, which, in turn, is waiting for more clarity on trade policy.Uncertainty and its impact on EUR/USDThe main question is whether the Trump administration has a clear plan of action or whether decisions are made spontaneously. So far, it seems that the plan exists, but on its own, which is confirmed by the history of tariffs against Mexico and Canada.Against this background, the EUR/USD pair continues to move in a narrow range. Even the US employment report is unlikely to be able to significantly change the situation, as the data may be distorted due to seasonal factors such as the fires in California and the revision of population statistics.Trading recommendationsThe current market situation poses risks for both sides. EUR/USD sales can only be considered in the event of a breakdown of the 1.0350 support level, but a rebound from the 1.0290–1.0300 zone may change the bears' plans. Similarly, buying the euro from the 1.0410 level is fraught with risks, as there is a fairly strong resistance at the top in the 1.0425–1.0440 zone.ConclusionThe EUR/USD pair remains in a state of uncertainty, balancing between political factors and macroeconomic data. Traders should be careful and consider the high risks of false breakouts and bounces. On the day of the release of important news and in the current situation with no trend, the best forex trading strategy is to stay out of the market.
Feb 07, 2025 Read
Financial market overview on February 6, 2025
EUR/USD, currency, GBP/USD, currency, USD/JPY, currency, Dow Jones, index, NASDAQ 100, index, S&P 500, index, Financial market overview on February 6, 2025 Bank of England's decision: rate cut in focusToday, the Bank of England is expected to lower its base interest rate by 25 bps, to 4.50%. This is in line with market expectations and analysts' forecasts. The decision is likely to be made by a majority of votes (8-1), while Catherine Mann, a member of the Monetary Policy Committee, known for her hawkish attitude, may vote for the unchanged rate. The regulator is likely to maintain a cautious tone, noting that “a gradual easing of monetary policy remains appropriate”. However, a softer mood is possible at the press conference, given the emerging risks of declining economic growth.Macroeconomic data: key releasesIn the United States, preliminary labor productivity statistics for the fourth quarter will be published today. High rates of productivity growth are restraining the growth of labor costs, despite the increase in nominal salaries. Mary Daley, President of the Federal Reserve Bank of San Francisco, is also scheduled to speak in the evening, which may shed light on the prospects for US monetary policy.In the Eurozone, retail sales data for December will be released. Over the past six months, this indicator has shown positive dynamics, indicating a recovery in consumer activity.In Sweden, the key event of the day will be the publication of the preliminary inflation estimate for January. The CPIF is projected at 1.54% (versus 1.79% for Riksbank and 1.6% consensus), and the CPIF excluding energy resources is 1.94% (versus 2.41% for Riksbank and 2.1% consensus). Weaker data may strengthen the case for monetary policy easing by the Riksbank. However, the preliminary estimate will not provide detailed information on the components of inflation and their specific weight.Markets and economic newsThe data on the PMI index in the Eurozone confirmed the preliminary estimates. The aggregate index was 50.2, and the index of business activity in the service sector was 51.3. However, there were different dynamics within the region. In Germany, the PMI was revised up due to an improvement in the industrial situation, while in France and Spain, the indicators decreased. The recession in Spain, which has remained the main driver of growth in the Eurozone in recent months, is particularly noteworthy. Nevertheless, its cumulative PMI remains at 54.0, which indicates stable growth.In France, the prime minister was able to avoid a vote of no confidence and approved the budget for 2025, aimed at reducing the deficit. A compromise with the Socialists made it possible to advance this bill.In the US, the ISM index in the service sector turned out to be weaker than expected, amounting to 52.8 against the previous 54.1 and forecast 54.3. This put pressure on the dollar, contributing to the growth of EUR/USD. Business activity, new orders, and price indices also declined. At the same time, the labor market is showing resilience: according to the ADP report, employment in the private sector increased by 183,000 in January (150,000 expected), which confirms the stability of the labor market.In Norway, housing prices rose by 1.4% mom in January, seasonally adjusted, which is significantly higher than Norges Bank's forecast (0.5%). This may cast doubt on the need to lower interest rates in the country, but Central Bank Governor Ida Woldenbache previously stated that the current situation in the housing market does not have a decisive impact on the regulator's policy.Stock markets: growth amid mixed macro dataGlobal stock markets ended yesterday with growth. The sectoral dynamics varied: in Europe and the United States, the performance of large companies varied markedly, but defensive assets were confidently ahead of the market on both sides of the Atlantic. Despite the decline in bond yields and mixed macroeconomic indicators, the banking sector showed positive dynamics.In the United States, the Dow Jones index rose 0.7%, the S&P 500 rose 0.4%, the Nasdaq rose 0.2%, and the Russell 2000 index of small companies added 1.1%. There is also a positive trend in Asia, and futures on European and American indices indicate continued growth.Bonds and the foreign exchange marketEuropean yields continued to decline at the long end of the curve, while short-term rates rose following comments from Philip Lane of the ECB about a possible delay in rate cuts. In the United States, on the contrary, weak ISM data and the stable plans of the Ministry of Finance for the placement of bonds supported 30-year bonds. In the short term, markets remain focused on the balance between inflationary risks and the prospects for policy easing.The EUR/USD pair has fully recovered after falling at the beginning of the week, returning to 1.04. USD/JPY continues to decline, being just above 152. The GBP/USD pair adjusted after rising the day before, in anticipation of the Bank of England's decision.The Swedish krona (SEK) is showing strengthening: EUR/SEK stopped at 11.35, and NOK/SEK – 0.97, awaiting inflation data in Sweden. The Polish zloty (PLN) also strengthened, bringing EUR/PLN back to the 4.20 support.ConclusionsThe rate cut by the Bank of England, weak ISM data in the United States and the stability of the labor market create conditions for increased volatility of currency pairs and stock assets. Investors' focus remains on regulatory decisions and market reactions to macroeconomic indicators.
Feb 06, 2025 Read
USD/JPY: Yen purchases protect against Trump's activity
USD/JPY, currency, USD/JPY: Yen purchases protect against Trump\'s activity USD/JPY analysis on February 6, 2025In Thursday's Asian session, USD/JPY continues its downward movement, developing a "bearish" trend that formed in mid-January. The pair is testing the 152.30 level, trying to break it down and updates the lows on December 12. The yen is strengthening due to its status as a defensive asset amid the escalating risks of the new trade policy of the US administration.Investors' main attention is focused on the actions of the White House. Donald Trump previously announced an increase in duties on goods from Canada and Mexico, but their introduction was postponed for 30 days due to an agreement to strengthen border controls.The situation with China remains tense. In response to the 10% duties from the United States, Beijing initiated proceedings at the WTO and announced an increase in tariffs on supplies of American LNG and coal by 15%, as well as on oil and agricultural machinery by 10% from February 10.The focus is now on the European Union, which could be the next target of US trade sanctions. The European Commission has already declared its readiness to take retaliatory measures.The latest macroeconomic data from the United States provided moderate support to the dollar. According to the ADP report, in January, the employment rate in the private sector increased from 176,000 to 183,000, while analysts predicted a slowdown to 150,000. The S&P Global index of business activity in the service sector improved slightly, from 52.8 to 52.9 points, while the ISM index, on the contrary, decreased from 54.0 to 52.8 points, not meeting expectations of 54.3 points.There is a positive trend in macroeconomic indicators in Japan. Jibun Bank's index of business activity in the manufacturing sector rose in January from 52.7 to 53.0 points. Wages rose by 4.8% in December, exceeding the projected 3.8%. The Bank of Japan maintains tough rhetoric: regulator representative Kazuhiro Masaki said that rate hikes would continue if inflation accelerated to the target level of 2.0%. This confirms the Central Bank's determination to adjust policy despite the global trade uncertainty. In December, core inflation in Japan reached 3.0%, which was the highest level in 16 months, and the forecast for fiscal year 2025 was raised to 2.1% from the previous 1.9%. The main driver of price growth remains the rise in the cost of imported goods due to the weakness of the yen.USD/JPY technical analysis for todayTechnical analysis by John Murphy confirms the continuation of the downward movement of USD/JPY. The Bollinger indicator is expanding, reflecting increased volatility, and the MACD retains a confident sell signal, being in the negative zone. Stochastic is moving down, approaching the oversold area, which indicates a potential short-term rebound.Trading recommendations• Sales are advisable after a confident breakdown of the level of 151.50 down with targets of 149.35. A protective stop is 152.74.• Purchases are possible with a rebound from 151.50 and a breakdown of the resistance of 152.74 with the prospect of growth to 154.00. Stop loss – 151.50.
Feb 06, 2025 Read
Forex analysis and forecast for GBP/USD for today, February 6, 2025
GBP/USD, currency, Forex analysis and forecast for GBP/USD for today, February 6, 2025 Today, the Bank of England (BoE) is expected to cut its benchmark interest rate by 25 basis points to 4.50%. This will be the third reduction in the current monetary easing cycle. However, the regulator is likely to maintain a cautious rhetoric, emphasizing the need for a gradual approach. The current forecast assumes that in 2025 the BoE will implement four rate cuts of 0.25 percentage points, which corresponds to the general downward trend in borrowing costs.A key factor for the markets will be the split in the voting of the members of the Monetary Policy Committee (MPC). If significant disagreements arise within the regulator, this may affect future forecasts for the rate. The well-known "hawk" Catherine Mann may oppose the reduction, arguing that the rate level must be kept in order to prevent an acceleration of inflation. At the same time, a more "soft" member of the committee, Swati Dhingra, on the contrary, may insist on an aggressive reduction – by 50 basis points at once. If the discrepancies turn out to be significant, it will highlight the uncertainty within the BoE regarding the pace of monetary policy easing.Together with the rate decision, the Bank of England will present an updated quarterly monetary policy report. According to preliminary expectations, it will revise down economic growth forecasts for 2025-2027. At the same time, inflation forecasts for at least 2025 may be adjusted upward. Such a combination of factors will increase concerns about stagflation, a scenario in which a slowdown in economic growth is accompanied by persistent inflationary risks.The impact of the Central Bank's decision on GBP/USDGBP/USD is consolidating near an important technical resistance zone in anticipation of the BoE decision. This zone includes the 55-day exponential moving average (55 D EMA) at 1.2522, as well as the 38.2% Fibonacci retracement level from the decline from 1.3433 to 1.2099 at 1.2609. If the pair fails to overcome this zone, then the current recovery from the level of 1.2099 is only corrective in nature. In this case, the long-term downtrend will remain in force, and in the future, a new round of decline is possible, breaking through the minimum of 1.2099.
Feb 06, 2025 Read
EUR/USD: tariffs and inflation are the main drivers of the pair
EUR/USD, currency, EUR/USD: tariffs and inflation are the main drivers of the pair FOREX fundamental analysis for EUR/USD on February 6, 2025The topic of tariffs and inflation remains in the focus of global financial markets. According to JP Morgan analysts, it is these two factors that shape the current investor mood, provoking significant volatility in currency pairs. The EUR/USD exchange rate shows sharp fluctuations, and this dynamic has become the new norm. Like Donald Trump's policy moves, it requires market participants to adapt.Interestingly, the Federal Reserve and the White House have different views on the prospects for inflation. Chicago Fed President Austan Goolsbee warns that the traditional macroeconomic approach, which excludes the impact of disruptions in supply chains, can be dangerous. The United States is facing the risk of a trade war, and although it is not as large-scale as the consequences of the pandemic, underestimating logistical problems can lead to serious consequences. ING analysts argue that tariff barriers will inevitably exert inflationary pressure, amplifying the effects of previous shocks. It would be naive to expect consistently low prices.The opposite point of view is expressed by Treasury Secretary Scott Bessant. In his opinion, lower budget expenditures, a reduction in the state apparatus and falling energy prices will create conditions for non-inflationary economic growth. He refers to the decline in yields on 10-year US government bonds, considering this to be a confirmation of his hypothesis. The White House is betting on this indicator, not on the Fed's policy. Moreover, despite the regulator's attempts to ease monetary policy, Treasury bond yields did not decrease, but Trump managed to create an effect. Howard Latnick is also skeptical of the thesis that tariffs will cause an acceleration of inflation. He believes that suppliers will be forced to lower prices to compensate for the increased costs, and as a result, the overall price level will not show significant growth.Nevertheless, the Fed's historical experience and forecasts suggest that tariff policy inevitably accelerates inflationary indicators such as CPI and PCE. This forces the Central Bank to stick to a tight monetary policy for longer, which in turn supports the US dollar. On the contrary, the refusal to impose new duties or their postponement will create conditions for the restoration of the euro's position against the dollar. However, the actions of the White House are often contradictory, which leads to unpredictable effects. For example, despite Trump's statements about his desire to reduce the foreign trade deficit, this figure has reached record levels since he came to power.The tariff risk factor is already influencing business behavior. Companies are seeking to speed up imports to the United States, fearing a future increase in duties. As a result, the negative trade balance increases, which paradoxically supports global demand and improves economic conditions in exporting countries, including the Eurozone. This is one of the reasons for the strengthening of the euro, along with expectations of possible easing in US trade policy.In the Forex market, the current dynamics of the euro is called the "bailout rally." However, most investors are confident that if tariff threats come to the fore again, the EUR/USD downtrend will resume. At the same time, the currency pair is influenced not only by protectionist policies, but also by macroeconomic statistics. In the near future, the market's attention will be focused on US employment data for January, which may trigger a consolidation of the euro. However, for more aggressive traders, EUR/USD sales are possible when the support level of 1.0365 breaks.EUR/USD technical analysisEUR/USD is declining as part of the correction of the short-term uptrend. The possible target for the bears is the support area 1.0350 - 1.0341. After testing this zone, it will be possible to consider new purchases with the first target at 1.0392 and the second at yesterday's high. If the pair confidently gains a foothold above yesterday's high, then the next growth target will be the upper target zone of 1.0514 - 1.0486.The key trend support is shifting to the levels of 1.0304 - 1.0290. In case of lower prices in this area, it will also be possible to look for entry into long positions.
Feb 06, 2025 Read
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