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The dollar is out of favor vs. the euro rises, the Fed has to wait for interest rate cuts_signal
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Official Website]: The US dollar is out of favor, vs. the rise of the euro, and the Federal Reserve still needs to wait for a rate cut_signal." Hope it will be helpful to you! The original content is as follows:
Asian Handicap Market Review
On Tuesday, the US dollar index continued to fall nearly 0.50% in the Asian Handicap and European Handicap, losing the 98 mark. As of now, the US dollar price is 97.93.
Geo-conflict: ① Trump believes that both Iraq and Israel violated the ceasefire agreement, but he also said that neither Iraq nor Israel violated the agreement nor faced consequences. Trump also changed his words and said he did not want the Iranian regime to change. ② The increase in oil prices since Israel's attack on Iran on June 13 has been xmmarkets.cnpletely smoothed out. ③ US media quoted preliminary intelligence assessment reports that its strike on Iran did not destroy nuclear facilities, and the White House denied the report. ④ After the US-Israeli leaders talked, they stopped further military strikes against Iran. ⑤Iranian President: Iran is ready to hold dialogue at the negotiating table.
Federal Official News:
①Powell: The policy is currently in a favorable position, so you can wait and wait before considering interest rate adjustments. The MPs said privately that I did the right thing. The vast majority of officials believe it is appropriate to cut interest rates later this year. It is too early to say that the dollar is falling. ②Bostic: There is no need to cut interest rates at present, and it is expected that there will be a 25-point rate later this year.Rate cuts at base points. ③Hamak: There is no urgent reason to cut interest rates at present. Interest rate policy may remain unchanged for quite some time. There is no need to overstate the reaction to the outflow of funds from the US dollar. ④ Kashkali: Faced with tariff uncertainty, the Federal Reserve is in a wait-and-see mode.
⑤ Williams: Tariffs and uncertainties will lead to slowing economic growth and rising inflation this year. ⑥ Collins: The current moderately restrictive monetary policy stance is necessary. Barr: Monetary policy is in a good position, and the Federal Reserve will wait and see how the economic situation develops.
Trump called out to Powell again: interest rates should be cut by at least 2 to 3 percentage points.
U.S. Senate Republican leader Thun plans to vote in the Senate on Friday on Trump's beautiful big bill.
Trump demanded that the Beautiful Bill be delivered to his desk as soon as possible and said that the agreement will be xmmarkets.cnpleted this week.
U.S. Treasury Secretary Becent: We will make a difference in state and local taxes (SALT) in the next 48 hours.
British media: The EU is ready to take more tariff countermeasures to put pressure on the US.
Summary of institutional views
JP Morgan Chase: Powell draws "two red lines" to lower interest rates. Has the hope of a interest rate cut in July been xmmarkets.cnpletely shattered?
1. Federal Reserve Chairman Powell's semi-annual monetary policy testimony did not change his message after last week's FOMC meeting. The core tone is to remain patient and "cool down" the market's speculation about recent interest rate cuts. It is worth noting that Chairman Powell did not echo recent speculations by directors Bowman and Waller about a possible rate cut as early as July. Instead, he reiterated that “for now, we are in a good position to wait and learn more about the possible direction of the economy before considering any policy position adjustments.”
2. During the Q&A session, there is almost no discussion on the recent policy interest rate path. Powell mentioned several times that if the following two situations occur, interest rate cuts will xmmarkets.cne: the tariff price transmission effect is extremely small. The labor market has deteriorated.
3. Regarding tariff transmission, Powell expressed agnosticism about its timing, amplitude, and whether it was a one-time or continuous phenomenon. He also mentioned twice that in the accompanying monetary policy report, four of the five policy rules support maintaining interest rates at current levels, while the fifth requires higher rates.
4. So far, Bowman and Waller’s recent dovish turn appears to be limited to these two decision makers. It is worth noting that at the same time Powell testified, New York Fed Chairman Williams had a similar to the tone of the chairman, and he also pointed out that the current policy is "appropriate" because it "leaved us to closely analyze incoming data."
Fanong Credit: Slight inflation + tariff suspense, the Federal Reserve will continue to wait and see
After weak CPI and PPI data, PCE inflation in the United States is expected to remain moderate again in May. Specifically, we expect both overall and core inflation to rise by 0.1% month-on-month (not roundedCore inflation will be close to 0.13% month-on-month), but the unfavorable base effect may lead to the year-on-year growth rate of overall inflation from 2.1% to 2.2%, and core inflation from 2.5% to 2.6%. Under normal circumstances, a series of weak monthly data may have pushed the Fed to the brink of another rate cut. However, in the current environment, the Fed may still tend to wait for further clarity in the tariff transmission mechanism and ensure that inflation expectations remain stable as tariffs begin to have an impact before considering whether to withdraw from interest rate cuts.
Forexlive analyst Adam Button: Can the US dollar/JPY challenge the 142 level?
At this time yesterday, the US dollar/JPY was still testing 148.00, but now it has fallen to 144.60. This is a rapid reversal, as the situation in the Middle East tends to be peaceful and the sharp plunge in oil prices may curb inflation, the dollar weakens across the board. If employment data is weak and inflation remains low, the Fed now has more room to cut interest rates. Judging from the trend, the decline of the US dollar/JPY almost xmmarkets.cnpletely gave up the gains since the outbreak of the Iran-Israel conflict, although it has not yet fully returned to the starting point. But this wave of reversal is very rapid and shows strong momentum. Nevertheless, I think that if we want to truly challenge the level of 142.00, the yield needs to decline further.
Analyst Valeria Bednarik: The bullish signal of the European and American daily charts is strong, breaking through the June high of 1.1XX will start a new round of upward trend
Europe and the United States have slightly fallen from the high point, hovering around the 1.1600 level during the early trading session of the US. From a technical point of view, the daily chart shows that bulls still maintain their dominance. The pair continued yesterday's rally, breaking through the 20-cycle SMA currently on bullish trend, with the moving average providing dynamic support around 1.1460. Meanwhile, the short-term moving average (100SMA) is much higher than the long-term moving average (200SMA), and is currently running firmly upward. Current technical indicators are still in a positive area, although the intensity varies.
To confirm a new round of rise, Europe and the United States need to break through the June high of 1.1631. On the 4-hour chart, the pair runs in a tight range far above the bullish moving average, while the technical indicators flatten above their respective midlines, consistent with the temporary pause movement of the current buying.
Key support and resistance levels
Support levels: 1.1560, 1.1510, 1.1470
Resistance levels: 1.1635, 1.1680, 1.1720
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