empty
InstaForex Loprais Team - Official participant of the Dakar rally
InstaForex Loprais Team - Official participant of the Dakar rally
This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.
Start as Beginner
How to start trading
Useful information
Training and recordings
InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.
Become Investor
PAMM System
ForexCopy System
Passive investments
Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.
Become Partner
Main Page
Partner Area
Advantages for Affiliates
Registration
This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.
All Promo Campaigns
Bonuses
Contests
Events
Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.
Full details
Forums
We are in social networks
Forex humour
Forex Portal
InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.
Learn More
History
Why Choose Us
InstaSport
Regulation
Company News
Awards
InstaForex Stars
InstaForex Offline
Headquarters
Key documents
Social Responsibility
29.03.2023 04:05 AM
The dollar will do everything on its own
Open trading account Open demo account

If you want to do a good job, do it yourself. The current dominant thought in the financial markets is that the banking crisis has done some of the work for the Federal Reserve in getting inflation back to the 2% target. Say, credit conditions will tighten, there will be less credit, the economy will slow down, and prices will fall. As a result, the central bank will have no need to raise rates. The cycle of monetary tightening is over, the U.S. dollar will fall. Is this really the case?

Despite a slowdown in year-over-year U.S. inflation, which may be due to a high-base effect, monthly consumer prices continue to rise steadily. Bloomberg experts expect the Personal Consumption Expenditures Index to expand by 0.5-0.6% m/m in February, so it's a bit early to say that the Fed's job is done. Most likely, events will develop under a different scenario: the banking crisis no longer on the headlines, investors back to focusing on inflation and the Fed compelled to continue monetary tightening. Nordea Markets expects the Fed to raise borrowing costs by another 50 bps at the next meetings and keep it at its peak levels by the end of 2023.

Consequently, current futures market forecasts that the federal funds rate will end the year at 4.9% look too low. All the worse for the EURUSD bulls.

Dynamics of Fed and European Central Bank peak rate expectations

This image is no longer relevant

The dollar can advance as banking fears ease. However, there are always two currencies in any pair. And the ECB's position looks much more hawkish than that of the Fed. Despite Bloomberg's projections of a decline in consumer price growth to 7.3% in the eurozone in March, core inflation is still able to set a new record. For the ECB, policy priorities are clear - it must bring inflation to its knees. Therefore, an increase in the deposit rate by another 75-100 bps looks more than logical.

We are talking about 4%, which is 60 bps higher than what the derivatives market currently expects. The ECB has farther to go than the Fed, and if so, the major currency pair has a good chance to continue its rally. Especially since the rate-sensitive interest rate swap differential signals a serious undervaluation of the EURUSD.

EURUSD and swap differential dynamics

This image is no longer relevant

This image is no longer relevant

According to this indicator, the euro should be quoted at $1.17. Interestingly, the last time we saw the same gap in the US and German bond yields was when the regional currency was priced at $1.21. Therefore, the pair can still rally.

Technically, on the EURUSD daily chart, the process of recovering the uptrend continues. In order to reach the previous target at 1.103, the pair should break through the resistance level of 1.089. This is an important level. A breakthrough can reduce the risks of activating the 1-2-3 reversal pattern.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
All Analytics
Fundamental analysis
USD declares war on EUR What's new is often just what's been forgotten. As spring draws to a close, the long-dismissed mantra "sell America" is making a comeback in markets. The phrase gained traction following
Marek Petkovich
14:59 2025-05-23 +02:00
1135
Fundamental analysis
USD/JPY: what happens with yen? The USD/JPY pair is experiencing heightened price turbulence. At the end of April, the pair sharply declined, hitting a 7-month low at 139.90. Then, last week, a northbound impulse pushed
Irina Manzenko
13:52 2025-05-23 +02:00
1120
Breaking Forecast Trading Plan Cryptocurrencies USD/RUB Russian Economy Video Analysis
Trading Instruments
EURUSD GBPUSD USDCHF USDCAD USDJPY AUDUSD EURGBP EURJPY NZDUSD EURNZD Silver Gold #CL #USDX COVID-19 Bitcoin
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD declares war on EUR

What's new is often just what's been forgotten. As spring draws to a close, the long-dismissed mantra "sell America" is making a comeback in markets. The phrase gained traction following
Marek Petkovich 14:59 2025-05-23 UTC+2

USD/JPY: what happens with yen?

The USD/JPY pair is experiencing heightened price turbulence. At the end of April, the pair sharply declined, hitting a 7-month low at 139.90. Then, last week, a northbound impulse pushed
Irina Manzenko 13:52 2025-05-23 UTC+2

Market Chaos to Continue (There is a likelihood of continued local declines in #USDX and gold prices)

Markets continue to act blindly amid the chaotic actions of Donald Trump, who is trying to pull the U.S. out of a deep, all-encompassing crisis like Baron Munchausen pulling himself
Pati Gani 10:19 2025-05-23 UTC+2

The Market Tucks Its Tail

A necessary project at the wrong time. The House of Representatives has approved Donald Trump's tax cut initiative. The President hopes it will help stimulate the economy and offset shortcomings
Marek Petkovich 09:29 2025-05-23 UTC+2

GBP/USD Overview – May 23: No Talks, but Hang in There

On Thursday, the GBP/USD currency pair traded relatively calmly, but like EUR/USD, it has been rising for two weeks. At first glance, one might wonder what reasons traders have
Paolo Greco 08:15 2025-05-23 UTC+2

EUR/USD Overview – May 23: The Rebellion Against the Dollar Continues

The EUR/USD currency pair traded relatively calmly on Thursday, yet it has risen significantly over the past two weeks. This movement can be interpreted in several ways. From a technical
Paolo Greco 08:15 2025-05-23 UTC+2

What to Pay Attention to on May 23? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Friday. Only two are noteworthy: the final estimate of Germany's Q1 GDP and April's UK retail sales data. The German GDP report
Paolo Greco 05:58 2025-05-23 UTC+2

The "Big, Beautiful Bill" vs. Import Tariffs

At present, Donald Trump is focused on promoting what he calls the "Big, Beautiful Law." In the trade war, Trump has done everything he could—he imposed tariffs, then lowered them
Chin Zhao 00:23 2025-05-23 UTC+2

The Fed Is Not Ready to Act Before the Second Half of the Year

In recent reviews, I have repeatedly addressed the topic of the Federal Reserve's monetary policy, market expectations, and the reality we all live in. I believe the market's expectations
Chin Zhao 00:23 2025-05-23 UTC+2

Canadian Inflation Resumed Growth. USD/CAD Overview

Core inflation in April unexpectedly rose higher than forecast, rising from 2.2% to 2.5% year-over-year. Headline inflation slowed from 2.3% to 1.7%, slightly above the forecast. The decline in headline
Kuvat Raharjo 00:23 2025-05-23 UTC+2

Top analytics

Relevance up to 22:00 2025-05-23 UTC--4
EUR/USD Forecast for May 23, 2025
05:16 2025-05-23
Technical analysis
Relevance up to 20:00 2025-05-23 UTC--4
EUR/USD Overview – May 23: The Rebellion Against the Dollar Continues
08:15 2025-05-23
Fundamental analysis
Relevance up to 03:00 2025-05-25 UTC--4
Market Chaos to Continue (There is a likelihood of continued local declines in #USDX and gold prices)
10:19 2025-05-23
Fundamental analysis
Relevance up to 20:00 2025-05-23 UTC--4
Trading Recommendations and Analysis for GBP/USD on May 23: Pound Prepares for a Historic Breakout
03:43 2025-05-23
Trading plan
Relevance up to 23:00 2025-05-23 UTC--4
How to Trade the GBP/USD Pair on May 23? Simple Tips and Trade Analysis for Beginners
05:58 2025-05-23
Trading plan
Can't speak right now?
Ask your question in the chat.
Widget callback
Callback widget
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.