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Trump’s Inauguration Sparks Dollar Speculation

Trump's Inauguration Sparks Dollar

The euro edged higher by 0.4% to $1.0315 against the U.S. dollar at the start of the trading week, as markets turned their focus to Donald Trump’s inauguration. Traders have adopted a cautious approach, with many holding back on significant moves until Trump is officially sworn in as President.

The U.S. dollar stands to benefit significantly under Trump’s administration, with promises of tax cuts, deregulation, and tariffs creating a potentially bullish environment for the greenback. These policies, especially the introduction of tariffs, are expected to support the dollar’s strength across global forex markets.

However, the Federal Reserve, which operates independently from the executive branch, will remain a critical factor in shaping monetary policy. Fed Chair Jay Powell, known for his steady hand, has signaled his intent to act against inflationary pressures if necessary. Any significant surge in inflation stemming from Trump’s policies could prompt the Fed to reconsider its approach to interest rates.

While forex traders anticipate continued dominance of the U.S. dollar, they remain alert to external factors, particularly the Fed’s potential interventions. The balance between Trump’s aggressive fiscal policies and Powell’s cautious monetary strategy will likely dictate the trajectory of the dollar in the coming months.

As Trump’s America-first policies take center stage, their impact on the global currency market is expected to be substantial. The interplay between fiscal and monetary policy will be crucial in determining whether the dollar maintains its stronghold in the evolving economic landscape.

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