Yesterday, Wall Street saw a rebound from Monday’s losses, with gains in the U.S. markets outpacing those in Europe. The S&P 500 rose by 2.5%, compared to a modest 0.4% gain in Germany’s DAX index. On the Warsaw Stock Exchange, the WIG20 index increased by 2.1%. The U.S. dollar also gained slightly, pushing the EUR/USD exchange rate down toward 1.13.
In the bond market, yields on short-term U.S. Treasury securities increased, while yields on long-term bonds declined. The market remains sensitive to news related to U.S. trade policy and the political pressure being exerted on the Federal Reserve. On the macroeconomic front, PMI data for both Europe and the U.S. is expected, while in Poland, retail sales data will be key in assessing the potential for the first interest rate cut.
The EUR/USD currency pair was unable to hold above the 1.15 level. Instead, there was a broad-based rebound in the value of the U.S. dollar, with the pair falling toward 1.13. Several factors may have contributed to this shift, one of the most significant being a statement by President Donald Trump. He declared that he has no intention of dismissing Federal Reserve Chair Jerome Powell — a message that could help ease concerns about the Fed’s independence in the short term. This assurance may have a stabilizing effect on market expectations regarding future U.S. monetary policy.
Additionally, reports have emerged suggesting a potential short-term easing of trade tensions. On one hand, there is talk of swift trade agreements with Japan and India. On the other, there have been cautious signals of de-escalation in the conflict with China. President Trump announced plans to significantly reduce current tariffs on Chinese goods, while the U.S. Treasury Secretary expressed hope for an imminent reduction in tensions.
But does this mean the U.S. dollar is entering a phase of lasting strength? The Trump administration has repeatedly signaled a preference for a weaker dollar to support export competitiveness. Trump’s political style remains unpredictable, and if the real U.S. economy continues to weaken due to the trade war, he could still blame Powell — regardless of the actual underlying causes.
While the recent signs of easing tensions are encouraging, a sustained strengthening of the dollar would require clearer and more consistent political and economic signals. Under current conditions, that certainty is lacking. As a result, the EUR/USD exchange rate may remain in a range between 1.12 and 1.15 until the market receives stronger fundamentals to support a directional move.
Author: Łukasz Zembik, Oanda TMS Brokers
Editorial Note
Disclaimer: The information contained in this publication is for informational purposes only. It does not constitute financial or any other type of advice, is general in nature, and is not intended for any specific recipient. Independent advice should be sought before acting on any information presented herein.
Source: CEO.com.pl – “Kurs dolara znów niosą polityczne deklaracje – czy to początek trwałego trendu?”
