empty
15.04.2024 05:00 PM
The dollar has not reached its potential

What is permissible for Jupiter may not be permissible for a bull. In the updated forecasts of Wall Street Journal experts, the figure of 2.2% for the U.S. GDP in 2024 is mentioned. European Central Bank specialists surveyed believe that the eurozone economy will expand by 0.5% this year. American domestic demand is much stronger than European, creating conditions for accelerating inflation and forcing the Fed to keep rates plateaued for a long period. This is all the better for the bears on EUR/USD.

Economists at the Wall Street Journal have reduced the chances of a recession in the U.S. from 39% in the January survey to 29%. This is the lowest level since April 2022. They expect the Fed to cut the federal funds rate three times this year, and inflation in the form of the Personal Consumption Expenditures Index to reach 2.5% by the end of 2024.

Dynamics of the probability of recession in the U.S. economy

This image is no longer relevant

Meanwhile, after the release of consumer price data in the States, FOMC officials began to backtrack on their March plans. For instance, Federal Reserve Bank of Boston President, Susan Collins, believes the federal funds rate will only be cut twice in 2024. Her colleague from the San Francisco Fed, Mary Daly, sees no urgency in easing monetary policy and asserts that the Fed still has a lot of work ahead.

American exceptionalism, the persistence of holding borrowing costs at 5.5%, and loose fiscal policy in the U.S. are the main components of the dollar's success recipe. It leads the currency race among the Big Ten, and there are no signs of a change in leadership.

It should be noted that the drop in EUR/USD to its lowest levels since early November was driven not only by the different pace of monetary expansion by the Fed and the ECB but also by geopolitics. By the end of the working week on April 12, markets were preparing for an Iranian airstrike on Israel, speculating on how much oil would rise in such a scenario, and buying safe-haven assets, including the U.S. dollar.

However, in reality, the devil turned out to be not as black as he was painted. 99% of missiles and drones were shot down, and no one was hurt. As a result, Brent plummeted below $90 per barrel, and bears on EUR/USD closed part of their positions. This led to a retreat in the main currency pair. However, at the same time, the yield on U.S. Treasury bonds rose, strengthening the position of the U.S. dollar.

Dynamics of U.S. Treasury Yields

This image is no longer relevant

This image is no longer relevant

Currently, the spread between U.S. and German debt market rates is at its highest levels since 2019, indicating the stability of the downward trend in EUR/USD. The downward movement of the main currency pair is based on a solid foundation, so pullbacks should be used for selling.

Technically, on the daily chart, EUR/USD has seen a rebound from the area of 5-month lows. However, the target at 161.8% according to the AB=CD pattern has not been canceled and is located at the 1.05 mark. It makes no sense to refuse to sell the euro against the U.S. dollar. Previous strategies of forming shorts on pullbacks remain relevant.

Marek Petkovich,
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

USD/CAD. Analysis and Forecast

The USD/CAD pair is showing a modest recovery from levels below 1.3600, retracing most of the previous day's losses, supported by a rebound in the U.S. dollar. In addition, concerns

Irina Yanina 13:09 2025-06-13 UTC+2

AUD/JPY. Analysis and Forecast

The AUD/JPY pair has been under selling pressure for the third consecutive day, reaching an almost two-week low around 92.30 during Friday's Asian session. After a sharp drop, spot prices

Irina Yanina 12:53 2025-06-13 UTC+2

Israeli Missile Strike on Iran Will Crash Global Markets (I Expect Bitcoin and #NDX to Resume Their Decline After a Local Upward Correction)

As I anticipated, the lack of a broad positive outcome in negotiations between China and the U.S. and renewed inflationary pressure led to a sharp decline in demand for corporate

Pati Gani 10:10 2025-06-13 UTC+2

Greed Will Do the Market No Good

The less you know, the better you sleep. Encouraged by a 21% rally in the S&P 500 from its April lows, the crowd continues to buy the dip—completely unbothered

Marek Petkovich 09:35 2025-06-13 UTC+2

What to Pay Attention to on June 13? A Breakdown of Fundamental Events for Beginners

Several macroeconomic reports are scheduled for Friday, but we doubt that the data will significantly impact traders today—especially today. As a reminder, Donald Trump intends to raise tariffs

Paolo Greco 07:16 2025-06-13 UTC+2

GBP/USD Overview – June 13: The Court Won't Stop Donald Trump!

The GBP/USD currency pair continued its upward movement on Thursday and nearly updated its three-year high. For most of the day, quotes hovered around the 1.36 level

Paolo Greco 03:41 2025-06-13 UTC+2

EUR/USD Overview – June 13: America's Economy Gets Lucky

The EUR/USD currency pair continued its strong upward movement throughout Thursday. Is anyone still puzzled as to why the U.S. dollar keeps falling? From our point of view, the reasons

Paolo Greco 03:41 2025-06-13 UTC+2

Trump Sends Out "Letters of Happiness"

It has been less than two weeks since Donald Trump raised import tariffs on steel and aluminum for all countries except the UK. While negotiations with the UK were deemed

Chin Zhao 00:21 2025-06-13 UTC+2

GBP/USD. A Weak Pound Stronger Than a Weak Greenback

Following weak UK labor market data, equally soft figures on British economic growth were released on Thursday. Almost all components of the report came out in the "red zone," increasing

Irina Manzenko 00:20 2025-06-13 UTC+2

The Dollar Flees the Battlefield

The old becomes new again. The word "recession" again trended in the Forex and other financial markets. May's U.S. Consumer Price Index (CPI) fell short of Bloomberg analysts' forecasts. Following

Marek Petkovich 00:20 2025-06-13 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.