Dollar continued to rise after Finance Minister Janet Yellen said that the Biden administration is willing to incur economic costs as it seeks to protect the national security interests of the US from threats posed by China.
Although Yellen recently called on Beijing to cooperate in solving common problems, it is clear that US politicians are more interested in protecting their economy. "National security is paramount in our relations with China," Yellen stated. "We will not compromise, even if it harms some of our economic interests."
Remarks from US politicians have been heard more and more, especially after the deterioration of relations with Beijing. It is clear that the Biden administration will now be protecting its interests even more, and the pursuit of healthy and fair economic competition will likely take a back seat. Meanwhile, issues such as climate change and easing the debt burden in developing countries will be handled by those who need it most – apparently European countries.
The recent speech of the Treasury Secretary set a defiant tone, challenging fears that China would eclipse the United States as the world's largest economic power. "Claims of US decline have been heard for several decades, but they have always been proven wrong," Yellen said. "The United States has repeatedly demonstrated its ability to adapt and innovate to confront new challenges. This time will be no different."
At the end of her speech, Yellen reiterated the view that China and the US, as the world's two largest economies, must work together. "It is important that we make progress on global issues regardless of our other disagreements," she said. "That's what the world needs from the two largest economies."
In terms of the forex market, euro bulls have a chance to continue a rally and update the highs. But in order to do so, the quote has to stay above 1.0950 and take control of 1.1000. This will allow a rise beyond 1.1035 and towards 1.1080. In case of a decline around 1.0950, the pair will fall further to 1.0910 and 1.0870.
Pound bulls also continue to have control over the market. However, the quote has to consolidate above 1.2450 in order to trigger a much larger rise to 1.2480 and 1.2520. In case there is a decline, bears will attempt to take 1.2410, which could lead to a fall to 1.2380 and 1.2340.