The president of the United States accuses China and the European Union with currency manipulations. At the same time, the euro and the yuan are more likely to be victims of trade conflicts than instruments. China's GDP growth in the second quarter was confirmed, as predicted. This is the lowest value for the last 27 years. The fiscal stimulus of $291 billion is clearly not enough for the economy to develop as the Chinese authorities plan. Disagreements with the US has hurt the country's foreign trade. As a result, shipments of Chinese products to the US fell by 7.8% in June, while imports fell by 31% in annual terms. The surplus, as a result, expanded to a 7-month high. The development of events clearly does not correspond to the previously written scenario in Washington.

The Fed will cut rates this month, including due to the risks of a slowdown in the country's economy. The head of the regulator made it clear that this would be a purely preventive measure. The yield curve, which predicted all recessions over the past 50 years, was at -1.6 bp on Friday, July 12, while it was at -19 bp a week earlier. This is the most dramatic indicator jump during the reign of Donald Trump. Financial markets are sensitive to a change in the position of the Fed, but it is not yet clear how much the regulator is ready to ease policy. There are suggestions that the criticism of the White House's host is only a background, and the central bank is actually led by investors.

Most of the surveyed economists believe that the negative and pressure towards the Fed does not affect the central bank's outlook. It's independence is a bit undermined and that's all. During Powell's speech to Congress, lawmakers urged him not to take into account the recommendations and threats from the White House, promising protection if necessary.

The fear is not Donald Trump, but financial markets. At the end of last year, it was they who signaled the need for a pause in the process of normalizing monetary policy. At the beginning of this year, the Fed leadership announced the beginning of a period implying patience. Then investors began to unwind the topic of rate cuts, and Powell seems to meet their expectations. Now the market is asking for three rounds of policy easing. The question is, will it come to life?

Authoritative forecaster Bloomberg - Eurobank Cyprus - believes that the dollar index will be stable until the end of the summer. At the same time, expectations of lowering the rate in September and later will allow "euro bulls" to reach $1.17 by the end of the year. While his forecast comes true at 100%. The EUR/USD quotes are firmly stuck in the trading range of $1.12–1.14.

The euro cannot benefit from a negative policy easing for the dollar. The fact is that the ECB meeting will be held next week on July 25, where the regulator may also announce the need to reduce rates. The pressure is on both currencies at the same time, so in the long run a combat draw.

However, some strategists expect the main pair to grow to the level of $1.14 this week. To do this, it will need to overcome the high at $ 1.1285.