The Fed faces a conflict of interest. On the one hand, we have to fight inflation. On the one hand, it ensures financial stability. A bank failure would cause trouble for US regulators, forcing the futures market to return to a dovish reversal notion.Let’s discuss this topic and make a trading plan EURUSD.
Weekly US Dollar Fundamental Forecast
Joe Biden’s statement that Americans can be confident in the security of their banking system when there is panic in the market only irritates the public. The Federal Reserve, Treasury Department, and Federal Deposit Insurance Corporation have taken unprecedented steps to bail out depositors who are 90% to 95% uninsured by failed banks. But what makes investors even more scared is the scale of the measures. VIX volatility index surges to his highest level since October, EURUSD Exceeded 1.07 again.
Dynamics of the VIX Index
Source: Bloomberg.
How can the SVB and signatory banks, with market caps of $209 billion and $110 billion respectively, take $10 trillion from the economy? tied up. There is a saying in the market that something breaks when the Fed raises rates. It is unclear whether the actions taken by regulators can save the banking system and restore confidence in the stock market.
In fact, the Fed faces a conflict of interest. Its mandate refers to both fighting inflation and ensuring financial stability. Prices are still high, but the financial restraint cycle needs to be put on hold to keep everyone calm. We predict a 25 bps increase, but are twice as likely to stay the same (34%).
DoubleLine Capital claims +25 bps in March to be the last of the cycle. Goldman Sachs expects no rate hikes at his next FOMC meeting, but Nomura predicts rate cuts. It was only a few days ago, but the market was confident in his 50 bps growth in the indicator!Why isn’t the USD falling under these circumstances?
The fall is fueled by the collapse of the Fed’s monetary policy-sensitive 2-year Treasury yield, the worst since 1987.
US Treasury Yield Dynamics
Source: Bloomberg.
Bankruptcies left investors forgetting the most important inflation data. A Bloomberg expert expects consumer prices to slow to 6% from 6.4% year-on-year, with core indicators he forecast to slow to 5.5% from 5.6%. However, monthly data becomes much more important.Can I stop publishing data EURUSD Bull? That’s quite possible, but the potential surprise from the ECB is far more significant.
every week EURUSD trading plan
French Finance Minister Bruno Le Maire has argued that the unique situation for U.S. banks and their lack of close ties to the technology sector does not threaten Europe. However, the derivatives market has lowered the cap on expected deposit rates from 4% to 3.2%. At its next meeting, the Policy Board may refuse to raise the interest rate cap by 50 bps, which will hurt the euro.incompetence of EURUSD Consolidating at 1.0705 could be a reason to enter a short-term sell.
EURUSD price chart in real time mode
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