EURUSD: mood swing again. Overview for 24.06.2022

The major currency pair is looking weak on Friday. The current quote for the instrument is 1.0530.

During his second day of reporting in US Congress, the US ed Chairman Jerome Powell described the American labour market as strong and admitted that it might remain strong if inflation was kept under control.

The regulator has no clear understanding of how all launched mechanisms will eventually work. For example, when it comes to the labour market, the Fed doesn’t exclude a possibility that the unemployment rate might go up from it’s all-time lows. Powell believes that the labour sector is “overheated”, whatever it could mean.

As for the economy, the Fed said that the demand/supply ratio should be more balanced. Powell mentioned that financial markets were doing a good job and the country’s banking system was strong. There are problems with long-term supply in the real estate market but demand remains high this year, so the growth in this sector should be strong.

It’s interesting that Powell emphasised that the regulator wouldn’t want to reduce the rates. Does it mean that the era of cheap money, affordable loans, and energetic consumer demand is over and the economy will face real tightening? It’s a very important question that has yet to be answered.

And if on the first day of speaking Powell managed to calm market players down, then the next day they didn’t like what he was saying. The “greenback” is in demand again because investors aren’t confident about future economic prospects and require “safe haven” assets.