While US lawmakers are introducing more bans and restrictions on AI chip supplies to China, thus fueling a new trade conflict, US Treasury Secretary Janet Yellen is making a completely opposite series of statements. According to the politician, one of the reasons she plans to go to China is to establish contact with a new group of leaders. Yellen has been calling for the world's two largest economies to work together to solve the world's most important problems.
"There is a new group of leaders, we need to get to know one another," Yellen said. "And we need to discuss our disagreements with one another so that we don't have misunderstandings, don't misunderstand one another's intentions," she said in an interview.
Although Yellen has not provided details about the upcoming trip to Beijing, in recent months she has repeatedly stated her intention to go there. Secretary of State Antony Blinken's recent trip to the Chinese capital highlighted the Biden administration's efforts to restore lines of communication with their counterparts but led nowhere. Now, the Treasury Secretary will continue to try to restore connections that have significantly worsened since the moment when China did not support the US, Europe, and other countries that sided with Ukraine. However, it was the geopolitical escalation, directly related to Taiwan, that worsened relations between the US and China.
It should be reminded that relations between the US and China sharply deteriorated during the Trump administration. The introduction of export and trade tariffs only made things worse. In recent months, both Yellen and senior White House officials have been keen to emphasize that the US does not want to lose China as a trade and geopolitical partner as well as an ally. However, they are doing very little, which does not allow the tension in relations to decrease. The Biden administration is also trying to increase the number of communication channels with China since Beijing cut many of these channels in protest against then-Speaker of the House Nancy Pelosi's trip to Taiwan last summer.
During the interview, Yellen reiterated that the US was taking and would continue to take actions that protect national security interests from threats from China if it "imposes some economic costs on it". She again called on Beijing to cooperate in solving common global problems. Yellen thinks that the countries have an obligation to cooperate to solve problems that are of a common nature, such as the debt that is holding back the growth of many countries after the pandemic, climate change, and a number of other issues.
The head of the Treasury also talked about the US economy, expressing her view that inflation could decrease in the context of a strong labor market.
As for the technical picture of EUR/USD, to regain control, buyers need to climb above 1.0925 and settle there. This will allow reaching 1.0960 and 1.1010. From this level, it is possible to go to 1.1060. However, it will be difficult to do this without fresh good data on the eurozone. If the pair declines, major buyers are likely to become active only around 1.0880. Otherwise, it would be wise to wait until the price touches the low of 1.0850 or to open long positions from 1.0800.
Meanwhile, demand for the pound sterling dropped sharply, indicating the formation of a correction. One can count on the growth in the pair if buyers gain control over the level of 1.2650. A breakout of this range will strengthen hopes for further recovery to around 1.2700. After that, the pound sterling may surge to around 1.2745. If the pair drops, bears will try to take control over 1.2600. In the event of this, a breakout of this range will affect bulls' positions and push GBP/USD to a low of 1.2570 with the prospect of falling to 1.2530.