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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Official Website]: The market has temporarily gained a breath, and Trump may further soften his position after 'slip'. Hope it will be helpful to you! The original content is as follows:
On Monday, the US dollar index hovered near the 100 mark. Although it once returned above the 100 mark during the session, it failed to stand firm. As of now, the US dollar price is 99.68.
Federal Governor Waller: In the large-scale tariff scenario, if there is a significant economic slowdown, it is inclined to cut interest rates earlier and more significantly. In the case of smaller tariffs, interest rate cuts may take place in the second half of the year. The impact of tariffs on inflation is expected to be temporary.
Federal Bostic: Inflation is still far above the target level. We need more clarity at the moment. The U.S. economy is in a state of stopping reply. Although we expect economic growth to exceed 1%, the final trend will depend on the direction of government policies. Therefore, it is not wise to adjust the policy significantly at present.
Trump considers imposing a 25% tariff exemption clause on imported cars and parts. It said it recently helped Apple CEO Cook; the US Department of Commerce launched a 232 investigation into semiconductors, drugs, etc., and will withdraw from the tomato tariff suspension agreement reached with Mexico in 2019.
Hassett, Director of the National Economic Commission for the United States: We have made great progress in tariff negotiations with the EU.
U.S. Treasury Secretary Bescent: There is no evidence that sovereign investors are selling U.S. assets. There is a toolbox to deal with bond market fluctuations, but it is far from being used. Fed Chairman Powell will be interviewed in the fallResponsible.
The New York Fed's one-year inflation expectation rose to 3.58%, while the three-year expectation remained unchanged at 3%.
OPEC lowers expectations for global crude oil demand growth this year and next two years, global and US economic growth expectations; JPMorgan Chase lowers its Brent crude oil price forecast in 2025 from US$73 per barrel to US$66 per barrel.
Each official: The parties still have differences on reaching a ceasefire agreement in Gaza.
In addition to the inflow of safe-haven funds, the prospect of further normalization of the Bank of Japan's monetary policy may also provide support for the yen in the near future. However, according to a statement issued by Bank of Japan Governor Kazuo Ueda, the central bank remains open to all policy options. This is because the impact of U.S. tariffs on inflation is unclear, which may both trigger inflation and deflation.
Megan Greene, a member of the Bank of England's Monetary Policy Committee, also explained the reasons for this uncertainty. The logic of US tariffs will not only harm the U.S.'s own economic growth, but also drag down its trading partners. This logic is relatively direct. However, the dollar exchange rate complicates inflation assessments.
As we analyzed earlier, U.S. tariffs should have caused the dollar to appreciate, and the dollar appreciation will in turn export inflation to trading partners through exchange rate channels. But now the US dollar has weakened, and the impact through exchange rate channels has become deflationary. If this situation continues, most central banks will avoid falling into the dilemma of weighing economic risks with inflation risks. Implementing a looser monetary policy will be easier to do, which in turn will ease the pressure on the appreciation of the local currency against the US dollar. At least for now, the impact of tariffs seems unlikely to reverse (without eliminating the tariff).
From the chart, the euro-USD may start an upward trend that lasts for several months. The senior market analyst said that Europe and the United States experienced a strong rebound last Friday, with daily closing prices and weekly closing prices higher than the upper boundary of the long-term downward channel. In addition, the analyst said that the recent sharp rebound in Europe and the United States came after failing to fall below the 200-day moving average on March 27, indicating a major bullish breakthrough. The analyst added that the interim resistance level is set at the 1.1715-1.1755 area and the 1.1910 level.
Goldman Sachs pointed out in its research report that the suspension of the Trump administration's "reciprocal tariffs" on April 9 prompted them to reverse the practice of raising the probability of recession from 45% to 65% in the next 12 months, but they still believe that the US economic growth in 2025 is very weak, and based on the fourth quarter standards, the growth rate is only 0.5%. They also lowered growth expectations in other regions, including Europe, but generally in smaller ways. The U.S. economic growth prospects are poor, while the U.S. dollar exchange rate is still higher than the long-term averageThe flat rate is 20%, which means that the US dollar still has a lot of room for downside.
The currency market responds fiercely to the growing trade tensions. The dollar weakened as investors digested expectations of slowing growth and the Fed's potential rate cut. Declining consumer sentiment and falling currency have exacerbated pressure on the dollar. Meanwhile, Trump's tariff shock has sparked concerns about global trade stability and hurt dollar demand. As uncertainty increases, the market expects the next wave of the dollar to fall. This weakness reflects the transfer of capital to a safer and more stable currency.
The weekly chart further confirms the bearish trend as the 100.65 support has been broken, and the US dollar is moving towards the upward channel support near 96-97.
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