In the FX market, the USD sold off significantly and EUR/USD initially bounced to 1.1678 after US President Donald Trump criticised the Fed in an interview with CNBC by saying that he is ’not thrilled‘ with the Fed rate hikes, notes the research team at Danske Bank.
“He also said he would not interfere with the Fed and we doubt the Fed will change its course due to the well-known Trump view. Yesterday’s sell-off in the USD seems a bit overdone in our view.”
“We have argued that a trade war is more likely to be USD positive due to the less open US economy and we still expect EUR/USD to trade at the low end of 1.15-1.21 in coming months. Technically, the 100-day EUR/USD moving average has broken below the 200-day moving average, which is usually a bearish sign for the cross.”