EUR/USD Sets Record, What's Happening with the US Economy?
The EUR/USD currency pair is still stable around 1.1790 on Tuesday afternoon, after touching a high above 1.1800, a figure not seen in almost four years. Although not moving much today, the Euro remains on track to strengthen for nine consecutive days against the US Dollar.
The weakening of the US Dollar was caused by a number of factors, especially uncertainty regarding trade policy and domestic fiscal issues. US President Donald Trump complained about the slow pace of trade negotiations with Japan, while US Treasury Secretary Scott Bessent threatened to raise tariffs on July 9. Although there was hope from the rare earth export agreement with China, the market remains cautious.
Another problem weighing on the Dollar is the US debt situation. The new tax bill proposed by Trump still does not have full support from the Republican Party, because it is feared that it will worsen the fiscal deficit. This uncertainty adds pressure on the market, prompting investors to avoid Dollar-based assets.
In addition to fiscal and trade issues, the direction of the Fed's interest rate policy is also in the spotlight. Pressure from the White House on Fed Chairman Jerome Powell to cut interest rates, coupled with weaker U.S. economic data, has fueled expectations of two rate cuts before the end of the year. That combination of factors has kept the dollar weaker and the euro stronger.
Source: (ayu-newsmaker)
