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US Federal Rate cut has come and gone, Now What?

The price of gold has certainly benefitted from the US-China trade war, hitting a six-year high of $1,510. When there are uncertainties in the US dollar and global economy, investors look for safe-haven asset classes to stash their cash. Gold is one of those safe-haven asset classes that investors turn to during times of trouble. In addition, the price of gold is inversely proportional to the price of the US dollar. This means that whenever the price of gold goes up, the price and value of the US dollar goes down. So, as currency traders who trade the USD against other currencies, we should all understand the relationship between the USD and AUX (Gold).

EUR-USD Most Watched Currency Pair Leading Up to Federal Reserve Rate Cut Decision

The USD is very strong right now, beating most of the currencies in the basket of six major currencies. Therefore, it will take a negative decision such as the advent of a US interest rate cut to cause the demise of the US dollar.

The Current EUR-USD Price Action is Not Surprising

The moment the decision by the Feds to cut US interest rate is announced on July 31st, the US dollar will begin tumbling faster than a lightning thunder bolt. This is how the game is played. So, if you don’t understand the game, it is time to learn it.

US Interest Rate Cut Sentiment Keeping EUR/USD Above 1.1200

If our prediction holds true, we can expect that the 1.1200 area of support could quickly become an area of resistance all day Thursday, July 25; and may give way Friday a t 8:30 am when US Q2 GDP is expected to come in lower than previous readings.

US Retail Sales Rose, But Building Permits Fall; Fed Rate Cut Decision Pending

The monthly building permit report is watched closely by traders, investors, economists, and by the Federal Reserve. Because all related factors associated with the construction of a building are very important economic activities (for example, financing and employment), the building permit report can give major hints as to the current state of the economy in the not-so-distant future. So, the fact that the latest building permit numbers came in well below estimates, there is cause for concern and the Feds may very will cut interest rate to jump start the economy by putting a cap on the progress of deflation.

US Inflation Rate Fell from 1.8% to 1.6% Giving Strong Indication of a Fed Rate Cut in July

With a strong US dollar, the stock market suffers. This was also one of the reasons why President Donald Trump lashed out at the Feds claiming that the agency was not doing enough to stimulate the economy, condemning the agency for hiking interest rates two times this year, thus stifling the efforts of the US President to stimulate the economy when he championed the passing of legislation which allows huge tax breaks to companies.

US Inflation Rate Drops Fueling Speculation of a Fed Rate Cut

A Fed rate cut of about 25-basis points is more in-line with the hints the Fed Chair was signaling.

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