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

The Euro Will Retain Its Strength and Investor Interest

During her speech, IMF Managing Director Kristalina Georgieva stated that she sees the potential for the euro to play a broader role globally.Her remarks came amid growing geopolitical instability

Jakub Novak 11:25 2025-06-20 UTC+2

Euro Slightly Rises After Lagarde's Speech

The euro saw a modest recovery after European Central Bank President Christine Lagarde stated that expanding trade within the region could help offset losses resulting from global fragmentation. Her optimistic

Jakub Novak 11:10 2025-06-20 UTC+2

Donald Trump – A Mastermind of Geopolitical Uncertainty (A Potential Correction in Oil and Gold Prices)

Six months into Donald Trump's presidency, it seems he has already thoroughly exhausted the world with his "brilliant" initiatives, groundbreaking actions aimed at making America great again, and his vivid

Pati Gani 09:49 2025-06-20 UTC+2

The Market Tries to Extinguish the Fire

Markets are digesting Donald Trump's announcement that a decision on U.S. strikes against Iran will be made within two weeks. The White House could have acted at any moment

Marek Petkovich 09:01 2025-06-20 UTC+2

What to Pay Attention to on June 20? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic reports scheduled for Friday. The only report of the day will be the UK retail sales report. No economic data will be released today

Paolo Greco 07:45 2025-06-20 UTC+2

GBP/USD Overview – June 20: The Bank of England Didn't Surprise

The GBP/USD currency pair traded relatively calmly on Thursday, given the fundamental backdrop available to the market. On Wednesday evening, the Federal Reserve announced the results of its latest meeting

Paolo Greco 07:16 2025-06-20 UTC+2

EUR/USD Overview – June 20: Summing Up the Fed Meeting

The EUR/USD currency pair traded relatively calmly on Wednesday and Thursday. Recall that the results of the latest 2025 Federal Reserve meeting were announced on Wednesday evening, but we didn't

Paolo Greco 07:16 2025-06-20 UTC+2

USD/JPY. Analysis and Forecast

The Japanese yen is showing weakness against the stronger U.S. dollar, with the USD/JPY pair reaching a new monthly high. This rise in the dollar against the yen is mainly

Irina Yanina 20:12 2025-06-19 UTC+2

Bank of England to Keep Rates Unchanged

Today, the Bank of England is expected to keep interest rates at 4.25% and signal that it is maintaining its approach of one cut every other meeting, as policymakers

Jakub Novak 11:02 2025-06-19 UTC+2

The Fed Maintains Its Previous Position

The U.S. dollar responded with growth, while risk assets such as the euro and pound declined. Following yesterday's meeting, Federal Reserve officials stated they expect two interest rate cuts

Jakub Novak 10:58 2025-06-19 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.