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Although yesterday's speech by US President Donald Trump at the Economic Club in New York did not cause strong market volatility, he supported the greenback.
Market participants expected to hear details from the American leader about the course of trade negotiations between Washington and Beijing, but he did not provide them.
The head of the White House said that he expects an early conclusion of a trade deal with China, however, if it does not take place, then duties on imported Chinese products will be significantly increased.
At the same time, Trump noted that in some aspects the European Union is even worse behaving towards the United States than China. This is a bad sign for the German auto industry, which has already become a victim of the trade conflict between Washington and Beijing. However, while it is expected that the US president will announce this or next week that the decision on European car tariffs will be delayed for another six months.
Statements of Trump put pressure on the euro. On Tuesday, the EUR/USD pair approached the psychological mark of 1.1000 and is slightly consolidating above this level today.
However, the fundamental background has not significantly changed. Investors almost ignored the publication of indexes from the ZEW Institute in Germany. Despite growth, indicators remain in the negative zone, which indicates the prevalence of negative expectations of German business.
The single European currency is actually deprived of any support factors.
Meanwhile, demand for the dollar remains high amid good US macroeconomic performance and continued uncertainty around Washington-Beijing trade negotiations.
Today, the focus is on the speech of Federal Reserve Chairman Powell before the United States Congress Joint Economic Committee.
Given the fact that US stock indices are trading near record highs, the head of the Fed when evaluating the US economy is likely to be of the opinion that the glass is more than half full than half empty.
At the October meeting, the Fed lowered the interest rate, but made it clear that this is just "insurance" against risks associated with a slowdown in the global economy. Global growth is still suppressed, and the trade issue remains unresolved.
The market is waiting for Powell to confirm the strength of the US labor market and moderate economic growth. Earlier, the Fed chairman noted that further easing of the monetary policy is unlikely, since it is appropriate for the situation, but the rate hike is also not worth the wait.
Further dynamics of EUR/USD will depend on whether Powell declares that the Fed's monetary policy will not soften in the near future, or advises to prepare for a long period of low rates.
If the Fed chief continues to operate on the old terms and focuses on the strength of the US economy, as well as on completing the cycle of preventive easing of monetary policy, the main currency pair may fall below the bottom of the 10th figure.
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