The dollar will rise in spite of fed policy
Despite yesterday’s blow from the head of the Federal reserve, the American currency will continue to trade within the upward trend. On Thursday, the pressure on the dollar is already weakening, and although in the short term it is possible a new surge in sales, the General mood of the USD index remains quite confident.
So, the EURUSD encountered psychological resistance around 1.14 and bounced back to their original positions. Yesterday’s rally of quotations was provoked purely by the dollar sales. Meanwhile, the Euro remains with their problems.
Today the Italian Prime Minister Salvini stated that the government is discussing the reduction targets budget deficit of more than 0.2%. Given that the European Commission insists that the country has made more significant adjustments to your budget plan, Rome continued to be at the procedure of excessive deficit and financial sanctions. And, therefore, the risks for the single currency remain.
Thus, even if the market starts to seriously reconsider their expectations for fed tightening in the direction of a slower pace of rate hikes, the Italian problems will not allow EURUSD to reverse the downward trend. By the way, investors are too dramatized statements Powell: given the current rate of 2-2. 5% target range in the region of 2.5-3.5% to achieve the goal of 3-4 increase by 0.25%. This means that next year the regulator will continue to tighten policy, but might take a pause after the increase next month.
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