EUR/USD: Mild optimism on China and Fed front temporarily boosting the Dollar

The single European currency was under mild pressure the last  day as a moderate optimism regarding the trade war between the United States and China and the de-escalation of tensions between President Trump and Fed Chairman Powell have brought the American currency back into the spotlight.

This development confirms recent articles regarding the characterization of President Donald Trump as a very controversial personality with decisions that often change and raise strong questions, something that has begun to significantly affect the credibility of both himself and American politics in general.

In such an environment, any assessment continues to be a dangerous gamble whose probability of success or failure is determined entirely by a game of power, impressions, and data managed by an extremely small club of people.

The geopolitical agenda has long overshadowed economic developments, which seem to play a secondary role in determining the exchange rate.

However, it is not something that can be ignored for a long time with some  data continuing to support the US dollar as Fed's interest rates remain significantly higher than those of the European Central Bank, while a looming recession in the US economy will not leave the also problematic European economy untouched.

The exchange rate earlier this morning on Asia was near 1,13, having fallen over 250 basis points from Monday's highs, which was quite reasonable and confirmed the words of yesterday's article.

On today's agenda, the research on the manufacturing and services sectors in the Eurozone stands out, while on the other side of the Atlantic, several statements by Fed officials, which is of particular interest especially at a time when a hard front has opened between President Donald Trump and Fed Chairman Jerome Powell.

The reasons that have driven the US currency into the corner recently have not been completely removed from the table and the fear that President Trump could return remains high.

So I would prefer to remain on hold.