Yesterday, the US President continued to criticize the work of the Federal Reserve System.
Trump said that the Fed's key interest rate is too high, which makes the US dollar uncompetitive. In his opinion, the Fed does not understand what they are doing, and the ongoing policy of quantitative easing was a ridiculous tool since very low inflation is a wonderful thing.
The market is already quite actively talking that the Fed will resort to lower interest rates, but bolder experts expect at least two lows that may occur in July and December of this year. The main reason for lowering interest rates are trading problems that will affect the pace of global economic growth.
As for inflation, yesterday, in support of Donald Trump's words, a report was issued on producer prices, which showed a minimal increase in May of this year, which only confirms the fact that there is almost no inflationary pressure in the economy.
According to the report of the US Department of Commerce, the producer price index in May of this year rose by 0.1% compared with the previous month. Core inflation, which does not take into account volatile categories and energy carriers, increased by 0.2% in May compared with the previous month. The data completely coincided with economists' forecasts.
Compared to the same period of the previous year, producer prices rose by 1.8%, while the base index rose by 2.3%.
Today, an equally important report on the consumer price index will be published, which will shed light on the Fed's possible actions during the July meeting. It is expected that the consumer price index will increase by only 0.1% in May this year compared with April, while the core Core CPI will increase by 0.2%. If the data coincide with economists' forecasts or even turn out to be worse, pressure on the US dollar will sharply increase again, as there will be no doubt that the Committee will lower the interest rate.
As for the technical picture of the EURUSD pair, euro buyers managed to return to the market after yesterday's report on inflation in the US and strengthened at the resistance of 1.1330, which maintains a bullish momentum in the market. Further growth of the euro will be based on data from the US in the afternoon, as well as the speech of the President of the European Central Bank, Mario Draghi. The main target for buyers of risky assets will be highs in the area of 1.1370 and 1.1430. If the euro buyers do not declare themselves in the near future, a downward correction before the release of important data on the US is not excluded. In this case, it is best to look at long positions from a large weekly support in the area of 1.1290.
