Eurobucks failed to gain a foothold above $1.14 on the first attempt as they stumbled over the comments of the main FOMC pigeon. The head of the Federal Reserve Bank of St. Louis, James Bullard, noted that the reduction in the rate in July by half a percentage point is unfounded. In his opinion, the monetary policy will become too accommodative. Federal Reserve officials need to observe the dynamics of inflation expectations and the yield curve. Thus, Bullard, who strongly supported a softer monetary policy, gave a shoulder to a falling dollar. Meanwhile, the market immediately revised its expectations for a 0.5% rate cut. If yesterday those were 40%, today it becomes 25%. At the same time, the softening by 0.25% in July is still estimated at 100%.

Note that Bullard is in the center of attention not only because of the pronounced "soft" position. His is interested in the White House. Donald Trump needs to fill two more vacant armchairs of FOMC officials who have a permanent right to vote. They should certainly be "dovish", supporting his opinion about the need to relax monetary policy in order to stimulate the economy and the devaluation of the dollar.

It is not the first day that there is talk that the American president needs a weaker dollar. Trump was extremely dissatisfied with the promises of Mario Draghi about a possible reduction in the ECB rate and recovery of the European QE as this will weaken the euro. It is expected that the topic of currency wars will be one of the most important and intense at the G20 summit. The market is increasingly talking about intervention, with which the object will be the US dollar. In BCA Research, it is noted that the leading dynamics of gold over US government bonds is a frightening sign for the US currency. Earlier in this situation, the dollar index has invariably dropped.

As for the EUR/USD pair, its inability to go beyond the upper limit of the previously designated $1.11-1.14 trading range is probably related to the closing of long positions after a spectacular four-day rally. To clarify the situation with both the trade wars and the Fed rate will help the hotly anticipated market meeting of Donald Trump and Xi Jinping. Now it would be reasonable not to force events but wait for the outcome of the G20 summit. The main pair can go around $1.13 at this time.

Senior White House officials told Reuters in an interview that Washington is not ready to soften its position and will demand Beijing to return to the previously agreed terms of the deal. According to Celestial, the parties must make concessions to each other.

Goldman's opinion on EUR / USD pair

The euro is still the favorite despite the fact that the market lays in prices a possible reduction in the ECB rate. Investors close the previously opened short positions in the euro and this increases the rate of growth of the single currency. According to Goldman Sachs, the exit from the short positions on the euro will stimulate the upward trend of the EUR/USD pair in the near future.

In recent weeks, traders have reduced the long position on the US dollar. However, the balanced position is not yet short. In the short term, the process will continue and the dollar will again depreciate against the euro.