The FOMC of the Federal Reserve in the US is scheduled to meet on Wednesday and deliberate on the country's monetary policy and the appropriate level of the interest rate.
The consensus forecasts project no changes to the rate, which is expected to be maintained at its current level of 1.75 per cent.
Such a decision, however, would likely anger the President who has recently criticised Jerome Powell and the Committee of keeping the rate ‘too high’.
Donald Trump said that he is not happy with how strong the US dollar has gotten recently, which, according to him, makes American businesses uncompetitive on the global markets.
Overall, Trump seems to be urging for lower interest rates, which would support his ongoing campaign to win leverage in the US/China trade war.
Thus, his bid to prompt the FOMC to cut the rate is stemming from his political agenda, which, however, does not necessarily align with the economic conditions in the US at the present moment.
First of all, the labour market continues to be enjoying a firm period of robust growth in employment and wages, in addition to diminished overall unemployment.
Last week it was announced that the unemployment rate has fallen to its lowest level in 50 years, at 3.5 per cent. Additionally, wage growth has more than doubled in November compared to the month before.
Second of all, inflation is currently at 1.8 per cent, which is close to, but still below, the 2 per cent symmetric target level of the FOMC. The longer-term projections anticipate an additional improvement in price stability.
Overall, the American economy is currently performing noticeably well, which means that the FOMC would most likely refrain from changing the interest rate on Wednesday, despite the external political pressures for a reduction.
Meanwhile, the general market sentiment of the EURUSD remains prevailingly bearish, as indicated by the MACD.
The price is currently forming a short-term correction to the major resistance at 1.0740; however, the pair would most likely fail to breakout above that level.