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
21.05.2025 09:46 AM
Will Global Central Banks Continue to Cut Interest Rates? (Bitcoin May Resume Growth and USD/JPY May Decline)
Open trading account Open demo account

Among the economically developed nations—those that belong to the Western wing of the global economy—there is an important rule: a target of 2% inflation, specifically consumer inflation. Achieving this target is not just a goal but a rule set in stone. Every central bank—be it the Federal Reserve, the European Central Bank, or the Reserve Bank of Australia—is expected to follow it.

In the last quarter of the 20th century, inflation in the U.S. reached remarkable levels by today's standards—over 14%, peaking in 1980 at 14.8%. Back then, America lived within its means, and the Fed was not yet the global emission center. The economy was still industrial and suffered occasional crises. However, with the implementation of the large-scale Reaganomics program under President Ronald Reagan, the U.S. shifted to a "life on credit" model—any American earning at least something could take out a loan and buy everything at once instead of gradually over a lifetime. Around this time, the idea of a 2% inflation target emerged—somewhat randomly. Why consumer inflation? Because the U.S. transitioned from an industrial economy to a post-industrial one, relying on the rest of the world for production while it printed dollars. This is a simplified picture, of course, but broadly accurate.

So why exactly 2%? The Fed lent money to the entire world through sales of its Treasuries and was strongly interested in keeping yields on those instruments low to avoid destabilizing the American financial system through high interest payments. That economic model still largely holds today, despite Donald Trump's attempts to reform it and return the U.S. to industrial development.

Now, the key question is: Why do Western central banks, except for Japan's, continue to follow this model? Not just because they're tied into dollar-based credit, which is largely unbacked except by trust in the Fed and the U.S. Rather, Western countries are directly dependent on U.S. interest rates—or more precisely, on U.S. monetary policy. This includes the ECB, Bank of Canada, and others. There are specific proportional relationships between U.S. and eurozone rates that depend on trade and current account balances. Inflation shocks may occasionally disrupt these proportions, but they tend to realign.

Right now, the Fed is weighing whether to continue cutting rates. Meanwhile, the ECB and Bank of England have paused, even though inflation nears the 2% target. They're maintaining parity by watching the Fed.

Will global central banks continue to cut rates? Yes, but only those that can do so without disrupting the rate equilibrium with the Fed, such as the Reserve Bank of Australia and the Reserve Bank of New Zealand. Others will follow only if the U.S. resumes rate cuts. This implies that the U.S. dollar will remain under pressure against major currencies, not only because of expected rate cuts but also due to current rate proportion dynamics that don't favor the dollar. With this in mind, we can expect the dollar index to decline toward the 98.00 mark soon.

This image is no longer relevant

This image is no longer relevant

Forecast of the Day:

Bitcoin

A significant decline in the dollar's value is contributing to Bitcoin's rise. It has broken out of the range above the resistance level of 105,200.00 and is heading toward its recent high, likely testing it. Breaking and holding above 107,513.65 could lead to a move toward 109,730.25. A potential buy entry could be at 107,873.92.

USD/JPY

The pair is trading below the 144.00 level. After a local upward retracement, it will likely resume a downward movement, and on dollar weakness, it could fall toward 142.35. A potential sell entry could be around 143.80.

Pati Gani,
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
Wave analysis
GBP/USD Analysis on June 16, 2025 The wave pattern for GBP/USD continues to indicate the development of an upward impulsive trend. The wave pattern is almost identical to that of EUR/USD, as the main driver
Chin Zhao
19:48 2025-06-16 +02:00
1510
Wave analysis
EUR/USD Analysis on June 16, 2025 The wave pattern on the 4-hour EUR/USD chart continues to indicate the development of an upward trend segment. This transformation occurred solely due to the new U.S. trade policy. Until
Chin Zhao
19:45 2025-06-16 +02:00
1495
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

The Pound Ignores Weak Data and Persistently Tries to Continue Rising

The macroeconomic data from the UK published last week looks frankly weak—everything is in the red zone, meaning worse than expected. Nevertheless, the pound continues to climb upward regardless
Kuvat Raharjo 19:36 2025-06-16 UTC+2

CFTC Report: The Dollar Is Being Sold Off Again. Awaiting New Revelations from Trump

Five weeks ago, the total short position on the U.S. dollar against major currencies stopped increasing, which gave reason to believe the dollar might begin an offensive in the currency
Kuvat Raharjo 12:14 2025-06-16 UTC+2

GBP/USD. Analysis and Forecast

Today, the GBP/USD pair is attempting to regain positive momentum while remaining on the defensive. Traders prefer to wait for the release of key data before opening directional positions
Irina Yanina 12:10 2025-06-16 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is attempting to regain positive momentum, approaching the psychological level of 1.600 and price levels last seen in 2021. Traders are eagerly awaiting the important political
Irina Yanina 12:08 2025-06-16 UTC+2

The Israel-Iran Confrontation. Fed Meeting. What's Next? (I expect further decline in USD/CAD and a local pullback in gold before a new wave of growth)

Israel and Iran are exchanging missile strikes, but it seems markets are trying to play their own game, assuming that this conflict will not cross the nuclear threshold
Pati Gani 10:51 2025-06-16 UTC+2

EUR/USD: War Is No Ally to the Greenback

At the start of the new trading week, the EUR/USD pair stayed within the 1.15 range and is even trying to approach the resistance level of 1.1600 despite the ongoing
Irina Manzenko 10:32 2025-06-16 UTC+2

What to Pay Attention to on June 16? A Breakdown of Fundamental Events for Beginners

No macroeconomic reports are scheduled for Monday, but the market does not lack news. This week, Donald Trump announced his intention to raise all import tariffs, as none
Paolo Greco 06:46 2025-06-16 UTC+2

GBP/USD Overview – June 16: How Trump Is Undermining the Dollar

The GBP/USD currency pair will remain under the influence of geopolitics and politics in the new week. Essentially, we've been saying the same thing every day for the past four
Paolo Greco 04:54 2025-06-16 UTC+2

EUR/USD Overview – June 16: The Israel-Iran Conflict Changes Nothing

The EUR/USD currency pair moved sharply back and forth throughout Friday. The pair traded with high volatility for two consecutive days, and there is a clear and logical explanation
Paolo Greco 04:54 2025-06-16 UTC+2

EUR/USD. Weekly Preview. Focus on the Middle East and the Federal Reserve

The final trading day of last week ended on an uncertain note. Reacting to Middle East developments, the EUR/USD pair sharply declined on Friday, retreating from the multi-year price high
Irina Manzenko 01:30 2025-06-16 UTC+2

Top analytics

Relevance up to 01:00 2025-06-17 UTC--5
USD/JPY: Simple Trading Tips for Beginner Traders on June 16. Analysis of Yesterday's Forex Trades
08:55 2025-06-16
Forecast
Relevance up to 05:00 2025-06-17 UTC--5
XAU/USD. Analysis and Forecast
12:18 2025-06-16
Technical analysis
Relevance up to 03:00 2025-06-18 UTC--5
The Israel-Iran Confrontation. Fed Meeting. What's Next? (I expect further decline in USD/CAD and a local pullback in gold before a new wave of growth)
10:51 2025-06-16
Fundamental analysis
Relevance up to 19:00 2025-06-16 UTC--5
GBP/USD Overview – June 16: How Trump Is Undermining the Dollar
04:54 2025-06-16
Fundamental analysis
Relevance up to 19:00 2025-06-16 UTC--5
EUR/USD Overview – June 16: The Israel-Iran Conflict Changes Nothing
04:54 2025-06-16
Fundamental analysis
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.