Wall Street Sets New Records, While Trump Revives Tariff Threats

EUR/USD

Key zone: 1.1580 - 1.1650

Buy: 1.1650 (on a strong positive foundation) ; target 1.1800-1.1850; StopLoss 1.1580

Sell: 1.1550 (on pullback after 1.1650 retest) ; target 1.1350; StopLoss 1.1620

U.S. stock indexes ended last week above expectations: the S&P 500 rose by 0.8%, the Nasdaq gained 1%, and the Dow Jones added 470 points. The growth was driven by inflation data that turned out softer than forecasts. This strengthened expectations of an imminent Fed rate cut and revived investors’ risk appetite.

The technology sector once again led the gains, while financial companies also advanced amid expectations of increased lending under a looser monetary policy.

Meanwhile, Washington is preparing for a new round of trade and political confrontation:

• The U.S. Senate plans to consider repealing Trump’s tariffs on imports from Canada and several other countries. However, the real chances of success are minimal — this is more of a political gesture amid growing dissatisfaction among businesses and consumers.
  Recall: the White House suspended trade contacts after Ottawa used a Ronald Reagan quote about tariffs in an advertising campaign, which Trump took as a provocation. Canada, in response, remains restrained and continues to call for dialogue.
• Trump again shows a tendency toward unilateral actions: he intends to take measures against Venezuela without consulting Congress. Meanwhile, concerns are growing in Congress over the legality of U.S. Navy operations in the Caribbean.
• India is also in no hurry to agree with Washington, delaying the conclusion of a trade agreement and making it clear that it does not intend to yield to U.S. pressure.

The most problematic factor for the market remains the shutdown: the U.S. government is approaching its fourth week of budget paralysis. Democrats continue to block the Republican bill on temporary funding, demanding an extension of healthcare subsidies.

This situation creates a negative backdrop ahead of the Fed meeting, where policymakers will have to take into account rising economic risks. Powell and his team maintain a cautious stance, viewing possible policy easing as insurance against rising unemployment rather than an urgent necessity.

This week, investors’ attention is focused on key events:

• The Bank of Canada is highly likely to cut its rate despite worsening trade relations with the U.S.
• In Japan, the Bank of Japan will make a rate decision less than a day after the Fed; new Prime Minister Sanae Takaichi is betting on economic support rather than tightening.
• Europe remains on pause: inflation has stabilized near the target level, and the eurozone economy shows resilience. Most likely, rates will remain unchanged at 2.0%, giving the euro a chance to strengthen.

The week’s fundamental backdrop remains aggressive: large deferred volumes are accumulating on both sides of the market in key zones. Speculative activity and local corrections are possible ahead of major macroeconomic events. New positions should be opened only with strict risk control.

So we act wisely and avoid unnecessary risks.

Profits to y’all!