The USD Side of the EUR/USD Trade Is Blurry; Maybe the Initiative Will Come from the EU Side
Forex traders are pretty confused about the USD; Donald Trump is a liability and a risk factor, the economy is not running at full speed across all sectors, inflation is weak and the FED doesn´t know whether to keep tightening the monetary policy faster.
So the future for EUR/USD doesn’t look very clear from the perspective of the USD, but we might get some action from the Euro side.
I don’t expect much change coming from the fundamentals because right now the European economy is at a steady pace, despite some peripheral countries still having difficulties.
But we might get some jawboning from the ECB (European Central Bank) and the president Draghi in particular. The Jackson Hole summit is taking place in a couple of weeks and there are some rumours around that Mario Draghi will seize the opportunity to try and talk the Euro down.
The ECB doesn’t like EUR/USD at these levels for sure because it hurts inflation as well as export (thus economic growth), so if nothing is coming from the US to ease their burden, it´s likely that the ECB might take matters into its own hands.
Mario Draghi is notorious for slapping the Euro down whenever he feels like and that usually happens without much drama, so we might get a bonus from him in a couple of week, although there are still some important economic figures to be released until then.
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