Trump – Powell Feud Heats Up, Dollar at Multi-Year Lows
EUR/USD Uptrend Sees Fresh Gains. RSI Warns of Pullback
The greenback finished last week deep in the red, falling to multi-year lows against the Euro amid tensions between President Trump and Fed Chair Powell. The former is expected to nominate a successor to the Fed helm even though Powell is still supposed to be the Chair until May 2026.
If a successor is named, this would undermine Powell’s ability to influence decisions and would actually erode the Fed’s independence and credibility. During last week, President Trump called Fed Chair Powell “terrible”, as well as “an average mentally person” and “low IQ for what he does”. The President’s dissatisfaction comes from the fact that Powell is not yet willing to cut the rates sharply. It’s safe to say the rift between the two is growing bigger and bigger.
The PCE Price Index that was released on Friday showed that prices are advancing and that inflation is getting hotter, possibly as a result of Trump’s tariffs. This makes the rate issue that much harder to navigate.
Economic Calendar Highlights
The first notable release of the week will be the U.S. Manufacturing PMI, scheduled for Tuesday at 2:00 pm GMT. Although not a major market mover, this indicator can have an impact on the USD.
The ADP Non-Farm Employment Change will be released on Wednesday at 12:15 pm GMT. The indicator tries to mimic the more important NFP but has a much lower impact.
The main event of the week will be the Non-Farm Payrolls report (NFP) that comes out on Thursday at 12:30 pm GMT. It is expected to show that 120K new jobs were added, lower than the previous 139K. If the job market starts to waver and inflation keeps increasing (as shown by last week’s PCE release), the Fed will have to act on the rate sooner rather than later. At the time of writing, there’s a 74.8% chance of a 25-bps cut in September.
The NFP release comes 1 day earlier than usual because Friday, U.S. banks will be closed in celebration of Independence Day.
Technical Outlook – EUR/USD
Although the uptrend looked exhausted, the dollar took a hit last week, which allowed the euro to take the pair as high as 1.1750. The RSI is now in overbought territory, and we can see a couple of daily candles with long upper wicks that indicate rejection.
Under normal circumstances, the most probable move would be a correction, possibly into the 1.1500 area. However, given the volatile macro scene, the pair will most likely be driven by rate cut speculation, tariff negotiations, and any other unexpected occurrences.
