While the euro and the pound are trying to show strength against the US dollar, US Senator Elizabeth Warren criticized the actions of the Federal Reserve System, saying she was very concerned that Jerome Powell was pushing the economy into recession. "There is nothing good about raising interest rates, and there is also nothing in Jerome Powell's arsenal that would be related to eliminating the primary causes of high inflation," she explained.
US Senator Elizabeth Warren (Massachusetts) discussed the Federal Reserve's inflation and interest rate hikes during her recent speech, starting with criticism of Federal Reserve Chairman Jerome Powell and his speech at Jackson Hole on Friday.
Remember that Powell said higher interest rates, slower economic growth, and softer labor market conditions would reduce inflation. Still, they will also cause some pain to households and companies. Such are the annoying costs of inflation. But failure to restore price stability will mean much more pain.
"I want to translate what Jerome Powell just said," the Massachusetts senator said. "What he called "some pain" means firing people from work, closing small businesses." When asked if she thinks it's a mistake that the Federal Reserve continues to raise interest rates, Warren stressed: "I'm very worried that this is the case."
Warren continued to put pressure on the fact that COVID is still paralyzing part of the global economy, that there are still some interruptions in the supply chain, and recalled Russia's military special operations in Ukraine, pushing energy prices higher and higher. She also went through the world's largest corporations, which continue to inflate prices, shifting their costs to consumers. "What is worse than high prices and a strong economy? These are high prices, and millions of people are out of work. I am very concerned that the Fed may tip this economy into recession," the senator said.
A survey released last week showed that 72% of economists surveyed by the National Association for Business Economics expect the US economy to be in a recession by the middle of next year. According to the National Bureau of Economic Research, almost one in five economists surveyed said the economy is already in a recession.
Some major figures on Wall Street believe that inflation has peaked, including Tesla CEO Elon Musk. Meanwhile, JPMorgan CEO Jamie Dimon said there is a possibility of "something worse" than the coming recession.
As for the technical picture of EURUSD, the risk of a sharp fall in the pair remains quite high. Bulls need to cling to parity and defend the 1.1000 level since, without this, it will be very problematic to expect a further recovery of the trading instrument. Going beyond 1.0050 will give confidence to buyers of risky assets, opening a direct road to 1.0090. The furthest target will be level 1.0130. In the event of a decline in the euro, buyers will probably offer something around 1.0000. But, having missed this level, you can say goodbye to the upward correction, as there will be talk again about the continuation of the bear market, which can push the euro to 0.9970 and 0.9940, which will open a direct road to 0.9905 and 0.9860.
The pound stalled around 1.1750 and began to lose its position against the US dollar. There is little chance of a major upward correction, especially if the bears take back 1.1700. Buyers now need to do everything to stay above this range. Without doing this, you can see another significant sell-off to the levels of 1.1650 and 1.1570. Their breakdown will create a direct road to both 1.1490 and 1.1420. It will be possible to talk about further corrections only after fixing above 1.1750, allowing the bulls to expect a recovery to 1.1830 and 1.1900.