From the Hoover Memoirs, the Europeans privately asked many times from the United States to import Inflation. In the 1920′ and 1930’s, central bank and government fiscal policy was devoted to success of private company interests. In the 1920’s and 1930’s, Tariffs and Import quotas were imposed by nations to protect disaster in domestic markets from foreign competition. The purpose was to gain “Competitive Advantage”, to depreciate currency prices in relation to the next nation’s exchange rate. The purpose was gain Export advantage.
The worst case of the exciting 1930’s “Currency Wars” was France and Britain as the French nearly destroyed GBP and in turn the UK and its why the French and Brits hardly communicate to current day.
I don’t see problems in Trump’s Trade Representative Navarro to utter public comments regarding nation’s purpose to devalue exchange rate prices. Its been the central bank goal and today is no different than the 1920’s, 1930’s and later 1960’s Currency devaluations. The difference between then and now is 1920’s and 1930’s were formulated as actual policy while today lacks a policy, so far but its early for Trump’s administration.
The goal of the post 2008 period and failure of central banks, Fiscal policy and Forward Guidance was lower interest rates and depreciate the currency price to the lowest common denominator. This mission was complete. Why Trade moves to bilateral is practically every currency price is near Parity versus each others exchange rate. Exchange rates today are just trading and playing around the edges of Parity against each other. The odd ball currency pair is GBP and GBP will remain the odd man out because of the effects from the 4.86 peg to Gold in 1931.
Navarro’s truthful comments resulted in what 50 pips higher in EUR/USD as the best response. Did we hear from the ECB or Europe yet, no but again, Europe has been fast asleep for many years.
EUR/USD. Main break points are located from 1.0914 to 1.0695. What’s vital to 1.0914 is the next range break point above at 1.0944 then 1.1104 and 1.1156. Below range break comes first at 1.0615 then 1.0519.
1.0790 is vital above as this break leads to 1.0807, 1.0836, 1.0852 and 1.0861. Above, EUR/USD can’t hold much in the way of gains becaue the price curve is way way overbought.
Below bottoms are locate at 1.0731, 1.0726, 1.0707 then break point at 1.0695 to lead to 1.0621. Same old strategy, sell the rallies.
Brian Twomey, Inside the Currency Market, btwomey.com