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The Iranian Foreign Minister discussed the protests in Iran with U.S. Special Envoy Witkov.January 12th - JPMorgan Chases securities trading division stated that the Trump administrations latest challenges to the Federal Reserves independence pose a threat to the US stock market, at least in the short term. News of a potential criminal investigation into the Fed impacted US markets Sunday night, causing stock index futures and the dollar to fall, with funds flowing into safe-haven assets such as gold. Andrew Taylor, JPMorgan Chases global head of market intelligence, said, "While macroeconomic and corporate fundamentals support a tactical bullish stance, the risks to the Feds independence are creating downward pressure on the market, so we remain cautious in the very short term. The risks surrounding the Feds independence could push US markets to underperform in the short term."On January 12th, it was reported that Bank of Communications received approval to acquire and restructure one of its rural banks, becoming the first state-owned bank to convert a rural bank into a branch bank in the new year, and the tenth such conversion since last year. Since 2025, in addition to Bank of Communications, Industrial and Commercial Bank of China and Agricultural Bank of China have also begun converting their rural banks into branches. Many industry insiders interviewed believe that with the Central Economic Work Conference setting the tone for "reducing the number and improving the quality" of small and medium-sized financial institutions, the reform and risk mitigation of small and medium-sized banks will accelerate this year, with mergers and acquisitions remaining the mainstream model. Data shows that more than 450 small and medium-sized banks will exit the market in 2025, of which more than 280 are rural banks, with Inner Mongolia, Shandong, and Hubei experiencing the largest reductions.On January 12th, Jane Foley, head of foreign exchange strategy at Rabobank, stated in a report that the US dollar is expected to face greater volatility this year as political pressure on the Federal Reserve rises. Markets are concerned that the Fed may lose its independence due to government demands for interest rate cuts and pressure on current Chairman Powell. However, Foley pointed out that some argue that with inflation remaining high, other FOMC members could provide a check on a Fed chairman who favors rate cuts. Foley stated that uncertainty surrounding the Feds future credibility may put downward pressure on the dollar, "but not to the point of triggering an out-of-control decline."Mexican President Simbaum: Had a “good conversation” with US President Trump.

EUR/USD Rebounds from Support Ahead of the ecb Central Bank's Decision. What Should Traders Anticipate?

Drake Hampton

Apr 14, 2022 10:28

Tomorrow, the European Central Bank will release its April monetary policy statement. While no interest rate adjustment or fresh macroeconomic projections are anticipated at this meeting, this does not mean the gathering will be boring; on the contrary, the gathering may generate significant volatility, notably for the euro. Traders should pay close attention to policymakers' assessments of the economic outlook, as well as their recommendations on future measures, particularly any comments on asset purchases in light of quickly shifting market conditions.

 

After years of battling to keep inflation below the 2% objective, the picture shifted substantially in the aftermath of the pandemic, and even more dramatically in recent months following Russia's invasion of Ukraine. Now, the ECB is confronted with the inverse situation: soaring inflationary pressures; indeed, the euro area's headline CPI hit a record high of 7.5 percent last month amid soaring energy costs, raising concerns that the institution is falling behind the curve in its fight to restore price stability.

 

Although some central bank members appear to be eager to unwind stimulus more aggressively and have echoed this sentiment, it is unlikely that President Christine Lagarde will deliver any major surprises, particularly given that downside risks to the growth profile have increased and now threaten to tip the economy into recession.

 

Lagarde, on the other hand, might modify recent communications and indicate that the asset purchase program could finish early in the third quarter, as opposed to the previous imprecise judgment that the bond-buying scheme will end sometime in the third quarter.

 

While the progressively hawkish message is not a significant divergence from prior pronouncements, it may help solidify expectations for the first interest rate hike in September, a scenario that might trigger a temporary bull run in the euro. That said, there is some room for EUR/USD strength in the coming days, but not for sustained gains, as the Fed's significant monetary policy divergence from the ECB continues to act as a tailwind for the US currency.

 

Technical Analysis of the EUR/USD

 

EUR/USD appears to be recovering from a crucial support level near the psychological 1.0800 level ahead of the ECB announcement (EUR/USD is up 0.37 percent to 1.0879 at the time of this writing). If the pair continues its upward movement in the coming sessions, initial resistance is seen near 1.0950. If this ceiling is breached, purchasing interest may increase, clearing the way for a probable advance towards 1.1135. If, on the other hand, the sellers return and push the exchange rate lower, 1.0800 appears to be a support level. If this floor is strongly breached, EUR/USD may test 1.0730, followed by the 2020 bottom.

 

EUR/USD Technical Chart

 

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