EUR/USD: Euro Gets Reprieve as Dollar Welcomes President Donald Trump

American currency stands to gain a ton if Trump delivers on his promises — tax cuts, tariffs and deregulation are all bullish for the buck.

🗽 Inauguration Day Today!

• The EURUSD was modestly higher to start the trading week, floating up by 0.4% to $1.0315. And what a start it will be — America is getting ready to welcome its new (and old) President, Donald Trump. The US dollar is preparing as well as it appears to be taking it easy as Trump gets inaugurated today.
• The American currency kicked off this week’s trading on a fairly muted note, largely due to traders holding their breath in anticipation of Trump heading to the White House today.

💰 Mighty Dollar in a Trumpian World

• The greenback has a lot going for it in a Trumpian world. The incoming President has set out to loosen up regulations for domestic businesses, cut taxes and raise tariffs. All these combined carry a ton of weight for the valuation of the buck (especially the tariffs, these could pump the dollar across the board).
• Against this backdrop, forex speculators expect king dollar to continue dominating the forex space for the foreseeable future. But there are other factors in play where Trump has no say.

👉👈 The Interplay Between Trump and Powell

• The Federal Reserve does not answer before Trump and that’s the institution, which narrates monetary policy, including the level of interest rates. The Fed is headed by the man who moves markets with a simple “Good afternoon,” Jay Powell, and he’s stated he has no intention to retire early, nor can Trump fire him.
• In case Trump’s America-first, pro-dollar policies cause inflation to spin out of control, the Fed might cut back its projections of lowering interest rates and even be forced to raise them again. After all, it took several years for the central bank to tame price pressures.