recovered to 1.0600, but there is not enough strength to gain a foothold higher. Frankly speaking, the market is simply waiting for a reason to sell the pair to 1.0470 and wait for developments there.
It’s all regarding the Fed. More precisely, in the expectations around his future steps. After the release of statistics for January last week, where a growth round was noted, stock forecasts shifted towards the continuation of the Fed. That is, the regulator is expected not two rate hikes before the pause, but three or more.
This cut off both the rise of the US stock market and the rally in cryptocurrencies. It is difficult to buy when you are waiting for the continuation of the troubled period in the economy due to the high cost of lending. But – great.
There are at least five possible scenarios for the development of events for the US Federal Reserve. The main ones are a “soft landing” of the economy, a “hard landing”, a compromise, the absence of any stress, and a neutral inflationary result.
Is there a chance for a soft landing? Certainly. This became possible in 1994-1995, then in 2001. In early 2020, too, the U.S. economy was thought to have been mildly stressed, but Jerome Powell likes to take credit for the feats.
Now Powell is taking a cautious stance, not to say anything extra that might upset the markets, but at the same time reaffirm his commitment to the previous course. The Fed is a hard hawk, and there should be no illusions here. The rate will rise until disinflationary factors outweigh. The Fed meeting will be held in the third decade of March, there is plenty of time to collect data. And so far everything is going in favor of the USD.
