This week proved to be quite tumultuous with Trump’s assassination attack at a Pennsylvania rally, Biden's COVID diagnosis, and jitters about him being a leader for the 2024 US election. However, on the positive side, the US dollar has made a comeback and halted the highs of the Euro. All this is more in this week’s edition of the FX Parkey Newsletter.
Euro's Advance Halted as Dollar Stages Comeback
The EUR/USD pair has retreated from recent highs as the US dollar shows signs of strength. This move comes despite expectations of ECB rate cuts, with the central bank projected to deliver three cuts this year.
The dollar's resilience is attributed to hawkish comments from Fed officials and strong economic data. However, upcoming PCE inflation data and Fed Chair Powell's speech could influence the currency pair's direction. Technical analysis suggests the EUR/USD may find support around the 1.0730 level, with the 20-day EMA acting as a key indicator for near-term strength.
Trump Incident Raises Economic Concerns
The recent assassination attempt on former President Donald Trump has led to short-term market reactions and raised long-term questions aimbout the 2024 election. Immediately following the incident, shares in Trump-related companies surged, while clean energy stocks declined. The event has increased Trump's re-election odds, potentially impacting future fiscal and trade policies.
Market analysts are now considering the implications of a possible Trump presidency on issues such as government debt, inflation, and US-China relations. The incident has injected additional uncertainty into an already volatile election season, potentially influencing market sentiment for months to come.
The Fall of Proprietary Trading Firms
Proprietary trading firms are facing significant challenges, leading to a wave of collapses and shutdowns. Key factors contributing to this trend include regulatory crackdowns, particularly in the US and EU, and financial challenges stemming from market volatility. Many firms have been accused of operating with simulated funded accounts, essentially running Ponzi schemes.
Lack of regulatory oversight and increased market volatility have also played roles in these failures. The industry is now under scrutiny, with calls for greater transparency and sustainable practices. Traders are advised to carefully vet prop firms and consider joining established platforms with proven track records.
Biden's COVID and Election Anxieties
President Joe Biden's recent COVID-19 diagnosis has added another layer of uncertainty to the 2024 US presidential election, causing markets to waver. The news comes amid growing calls for Biden to step aside, with nearly two-thirds of his own party supporting his withdrawal from the race.
This development has raised questions about potential policy shifts and their impact on various sectors. Analysts suggest that a Biden exit could lead to increased market volatility, with possible benefits for US equities and safe-haven assets. The situation underscores the significant influence of political developments on financial markets.
