empty
08.05.2025 09:53 AM
Fed's Rate Hold and US-China Talks Support the Dollar (High Likelihood of EUR/USD and Gold Declines)

The Federal Reserve remained firm, with its leadership reaffirming a steadfast wait-and-see approach. Interestingly, the Fed did not respond to notable changes in the economy, citing heightened uncertainty as the primary factor.

Indeed, the first 100 days of Donald Trump's second presidency have already allowed for some preliminary conclusions, pointing to a likely continuation of the "managed chaos" he generates, potentially for the entire four-year term. The 47th president is not merely a symbol of impulsive decision-making but a representation of the deep, systemic changes reshaping American life. Naturally, these changes will significantly affect financial markets, ushering in a prolonged period of volatility.

Regarding the FOMC meeting and Jerome Powell's press conference, I think things could have gone differently. Specifically, in acknowledging the uncertainty stemming from the US-China trade war and global tensions, the Fed could have hinted that if inflation continues to slow, as recent economic data suggest, it might consider cutting the key interest rate by 0.25%. But that did not happen. On the contrary, Powell acknowledged "elevated risks of higher unemployment and inflation." He also clarified that the Fed will act based on actual data rather than preemptively, as inflation remains stubbornly high.

From a more conspiratorial perspective, the Fed's actions—or lack thereof—and Powell's tone could be interpreted as laying the groundwork for undermining Trump's presidency, which some consider unfavorable to the so-called "deep state." Historically, the Fed has often made preemptive moves to steer the economy. However, in today's polarized environment, the Fed's current stance may be seen as a subtle form of political resistance.

And what about the markets? They are likely to have a tough four years. The ruling class's lack of support and complete consensus will be a source of confrontation and, as a consequence, economic instability. The high volatility and unpredictability of Trump's actions—where he often changes his stance within hours—will result in erratic movements in the markets. His attempts to shift America in a certain direction may lead investors to respond to news and external noise rather than addressing actual economic issues, which they would have previously ignored.

What to Expect Today

Investors will likely focus on the US-China negotiations, interpreting any developments as positive. This could stimulate demand for stocks, cryptocurrencies, and commodity-based assets. The dollar may also continue to gain support due to the Fed's decision to hold interest rates steady. On the other hand, gold could extend its decline under these conditions.

This image is no longer relevant

This image is no longer relevant

Daily Forecast

EUR/USD

The pair is trading near the strong support level at 1.1270. A break below this level likely leads to a drop toward 1.1175. The 1.1262 mark may be a suitable entry point for selling the pair.

Gold (XAU/USD)

Gold prices are falling amid a strengthening dollar and the optimism surrounding the US-China dialogue. This may lead to a continued decline in gold prices, first toward $3,262.00 and then to $3,210.00.

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

Today, gold maintains a positive tone; however, bulls are acting cautiously, preferring to refrain from aggressive buying ahead of the release of the important U.S. Non-Farm Payrolls (NFP) report

Irina Yanina 15:30 2025-06-06 UTC+2

WTI. West Texas Intermediate. Traders Await NFP

Prices for West Texas Intermediate (WTI) crude oil remain in the middle of a three-day range. Prices are supported by hopes for the resumption of trade negotiations between the U.S

Irina Yanina 11:23 2025-06-06 UTC+2

ECB Meeting Results and Christine Lagarde's Press Conference

The euro responded with a significant rise following the ECB's decision to cut interest rates. But why did this happen? Let's break it down. The key reason behind the euro's

Jakub Novak 10:54 2025-06-06 UTC+2

What to Pay Attention to on June 6th? Fundamental Event Analysis for Beginners

Analysis of Macroeconomic Reports: A fairly large number of macroeconomic publications are scheduled for Friday, but most of them will not interest traders. For example, the report on industrial production

Paolo Greco 10:11 2025-06-06 UTC+2

Overview for the GBP/USD pair on June 6, 2025

The GBP/USD currency pair continued its upward movement on Thursday, trading overall calmly and without any rush. There was no news for either the British pound or the U.S. dollar

Paolo Greco 05:47 2025-06-06 UTC+2

Overview for EUR/USD on June 6, 2025

The EUR/USD currency pair continued to trade very calmly on Thursday, even when the results of the ECB meeting became known. It should be noted that there was no intrigue

Paolo Greco 05:21 2025-06-06 UTC+2

The EU Economy Will Not Suffer, According to Lagarde

Today, a meeting of the European regulator took place, where the obvious and expected decision was made to lower all three interest rates by another 25 basis points. The decision

Chin Zhao 02:56 2025-06-06 UTC+2

USD/JPY. Analysis and Forecast

During the European session on Thursday, the Japanese yen maintained stability, allowing the USD/JPY pair to hold above the key 143.00 level amid a moderate rise in the U.S. dollar

Irina Yanina 12:04 2025-06-05 UTC+2

AUD/JPY. Analysis and Forecast

Today the AUD/JPY pair is attracting new buyers. Recent Chinese data, including the private Caixin survey, showed a moderate acceleration in growth in China's services sector

Irina Yanina 11:36 2025-06-05 UTC+2

USD/CAD. Analysis and Forecast

The USD/CAD pair continues to decline. Fundamental factors support bearish sentiment, indicating that the path of least resistance for spot prices remains downward. Reports of a trade agreement between

Irina Yanina 11:33 2025-06-05 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.