Now that the debt ceiling issue has been resolved, there are fewer reasons to hold and invest in the US Dollar. The United States is unlikely to default on its debt, providing stability for investors.
In contrast, Germany has entered a technical recession, but the focus of the European Central Bank (ECB) is primarily on maintaining price stability rather than addressing employment concerns. With inflation still at 7%, there remains a strong case for further interest rate hikes. However, the Federal Reserve (Fed) has not completed its tightening cycle. The recent PCE (Personal Consumption Expenditures) data indicates that inflation is still not adequately controlled, necessitating additional measures. The extent of these measures remains uncertain.
The financial markets have already factored in a potential rate cut by the Fed later in the year. Additionally, it is important to note that there will be no meeting in August, which means that from July to September, the only plausible direction for the EURO is upward—provided there are no unexpected economic surprises. Moreover, the markets have anticipated a significant role for artificial intelligence (AI) in the economy. This development is deflationary in nature and may result in job cuts. These factors collectively present challenges for the economy but are favorable for the EUROzone as there are far more regulatory factors when it comes to employment and the job market
In contrast, Germany has entered a technical recession, but the focus of the European Central Bank (ECB) is primarily on maintaining price stability rather than addressing employment concerns. With inflation still at 7%, there remains a strong case for further interest rate hikes. However, the Federal Reserve (Fed) has not completed its tightening cycle. The recent PCE (Personal Consumption Expenditures) data indicates that inflation is still not adequately controlled, necessitating additional measures. The extent of these measures remains uncertain.
The financial markets have already factored in a potential rate cut by the Fed later in the year. Additionally, it is important to note that there will be no meeting in August, which means that from July to September, the only plausible direction for the EURO is upward—provided there are no unexpected economic surprises. Moreover, the markets have anticipated a significant role for artificial intelligence (AI) in the economy. This development is deflationary in nature and may result in job cuts. These factors collectively present challenges for the economy but are favorable for the EUROzone as there are far more regulatory factors when it comes to employment and the job market
As a result, the US dollar may experience a double top formation, while the EURO could decline to approximately to 1.03, representing a 7% decrease from its previous highs.
To gain a more comprehensive understanding of my fundamental view, I will be releasing a new video in which I will explain these updated perspectives in more detail.