On Tuesday, the EURUSD major remains depressed. Current quote is 1.0420.
The main reason for global sales is the fear of increasing recession in the US economy. After last Friday the US published the inflation report for May, demonstrating growth to the 40-years high of 8.6% y/y, investors got scared. But of what?
Firstly, they fear that the Federal Reserve system will have to act more actively and aggressively. On the verge of the June meeting scheduled for today, this is no good news. Before the statistics were published, investors were sure that that the interest rate would grow by 50 base points, as had been announced. Now it has become quite possible that the rate will grow by 75 points at once to increase the influence of the price.
Secondly, speeding up inflation means that the economy is stressed. There are increasing chances for a recession, which promises nothing nice.
As soon as Wednesday, we will find out whether the Fed will speed up the toughening of monetary conditions and what it will comment on the inflation and economic situation. As for now, the market will remain stressed.
Source: Roboforex
