Event to pay attention to today:
21:00 EET. USD – FOMC Rate Decision
EURUSD:
On Tuesday, the EUR/USD exchange rate experienced a slight decline, dropping six-tenths of a percentage point to the 1.0400 mark as financial markets prepare for the upcoming Federal Reserve (Fed) statement scheduled for Wednesday. Market analysis indicates a strong likelihood of the Fed maintaining its current interest rates in January. However, investors will be closely monitoring not only the content of Fed Chairman Jerome Powell’s press conference, but also any potential tweets from US President Donald Trump.
The economic calendar for the first half of the week features no significant European data, with traders having to wait until Thursday’s release of gross domestic product (GDP) data from both Germany and the EU for the fourth quarter.US President Donald Trump resumed his aggressive tariff programme late on Monday, reiterating his intention to impose high duties on imports of a wide range of foreign goods and industries. The latest version of the plan includes unspecified tariffs on steel, copper, aluminium, various semiconductors and foreign microprocessors in general, with the aim of encouraging foreign companies to move their factories to the US.It is not an easy task to convince these industries to shift production to the domestic market, as setting up plants in the US is usually costly and US labour requires significantly higher wages compared to countries that produce manufactured goods on a large scale. Consequently, import duties are unlikely to significantly impact production decisions; instead, they could lead to inflation and reduced consumer spending.The US Federal Reserve is expected to announce its latest interest rate decision on Wednesday. While no change in the federal funds rate is expected this week, traders will be closely monitoring the developing tensions between Fed Chairman Jerome Powell and President Trump. The Fed’s significant autonomy limits the White House’s influence over interest rates, and President Trump has previously expressed dissatisfaction with this.Trump’s recent comments that he will ‘demand’ lower interest rates are expected to influence Fed Chairman Powell’s upcoming press conference.
Trading recommendation: Trading mainly by Sell orders from the current price level.
Origin: FreshForex
