BoE's Greene Says US Tariffs Likely to Put Downward Pressure on UK Inflation

Economic

Forex

Summary:

Britain is more likely to see lower rather than higher inflation as a result of U.S. President Donald Trump's tariffs, Bank of England policymaker Megan Greene said on Tuesday.

Greene, who has sounded more worried about the persistence of inflation pressure than some of her other colleagues on the Monetary Policy Committee, said Britain's decision not to levy reciprocal tariffs meant it was likely to become a destination for cheaper goods from Asia and the European Union.

"The tariffs actually represent more of a disinflationary risk than an inflationary risk," Greene told Bloomberg TV.

However, she said she remained concerned about domestic inflation pressures in Britain due to a lack of supply capacity, which informed the "cautious" approach to rate cuts she has taken so far.

The BoE's next interest rate announcement comes on May 8. Financial markets on Tuesday priced in a 100% chance of a rate cut, with recession fears rising sharply in the wake of Trump's imposition of tariffs.

Asked about investors' worries over the independence of the U.S. Federal Reserve after Trump criticised its chair Jerome Powell, Greene said: "Credibility is the currency of central banks and I think independence is quite an important piece of that."

Source: TradingView

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Warren Takunda

Economic

Stocks

Asian shares were trading mixed Tuesday amid global skepticism about U.S. investments and President Donald Trump’s trade war.

Trading was cautious in Asia, where the benchmark Nikkei 225 lost 0.2% in afternoon trading to 34,224.33. Australia’s S&P/ASX 200 was virtually unchanged, inching down less than 0.1% to 7,816.70. South Korea’s Kospi lost 0.2% to 2,483.60. Hong Kong’s Hang Seng added nearly 0.6% to 21,513.91, while the Shanghai Composite added 0.4% to 3,303.32.

Trump’s tariffs and the retaliatory measures from China hang as a shadow over the region.

“Across Asia, there is undoubtedly a sense of urgency to get to the negotiation table even as striking a deal at an appropriate cost can be tough,” said Tan Boon Heng, at Mizuho Bank’s Asia & Oceania Treasury Department.

“China’s warning to countries not to resolve U.S. tariffs by striking deals at the expense of Beijing’s interests reveals the geo-economic polarization.”

On Wall Street the previous day, the S&P 500 sank 2.4% in another wipeout. That yanked the index that’s at the center of many 401(k) accounts 16% below a record set two months ago.

The Dow Jones Industrial Average dropped 971 points, or 2.5%, while losses for Tesla and Nvidia helped drag the Nasdaq composite down 2.6%.

U.S. government bonds and the value of the U.S. dollar also sank as prices retreated across U.S. markets. That’s an unusual and worrying move because Treasurys and the dollar have historically strengthened during episodes of nervousness.

This time around, though, it’s policies directly from Washington that are causing the fear and potentially weakening their reputations as some of the world’s safest investments.

In energy trading, benchmark U.S. crude gained 45 cents to $63.53 a barrel. Brent crude, the international standard, rose 45 cents to $66.71 a barrel.

In currency trading, the U.S. dollar edged down to 140.31 Japanese yen from 140.80 yen. The euro cost $1.1508, down from $1.1514.

Source: AP

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Blue River

Technical Analysis

The USD/JPY pair dropped to 140.13 on Tuesday, marking yet another seven-month low.

Key Drivers Behind USD/JPY Movements

The yen’s rally is gaining momentum amid rising global trade risks. Additionally, investors are growing increasingly wary of US assets.

Last week’s tentative market optimism has now faded, with sentiment deteriorating following remarks from US President Donald Trump regarding the potential dismissal of Federal Reserve Chair Jerome Powell. Trump has expressed dissatisfaction with the Fed’s pace of decision-making, with the White House believing progress is too slow.

Domestically, Japanese investors are closely watching the upcoming Bank of Japan (BoJ) meeting on 1 May. While the key interest rate is expected to remain steady at 0.50% per annum, the central bank may revise its economic growth forecasts—prompted by mounting external risks, including the impact of US tariffs on Japanese exports.

The yen continues to perform strongly as a safe-haven asset. However, an excessively strong JPY also carries risks.

Technical Analysis: USD/JPY

H4 Chart

On the H4 chart, USD/JPY has broken below the 141.55 level, extending its downward wave towards 138.88. This is a near-term target, and upon reaching it, a corrective rebound towards 143.55 is possible. Beyond that, further downside towards 136.22 may be considered. This scenario is supported by the MACD indicator, with its signal line firmly below zero and pointing sharply downward.

H1 Chart

On the H1 chart, the pair continues to develop the third wave of its downtrend. The immediate target of 140.00 has been met, and a temporary rebound to 141.55 (testing from below) could occur today. Subsequently, another decline towards 138.88 may follow. This outlook is corroborated by the Stochastic oscillator, whose signal line is below 20 but turning upward towards 80.

Conclusion

While the yen’s strength reflects its defensive appeal, excessive appreciation could prove detrimental. Traders should monitor both fundamental developments and technical signals for further guidance.

Source: ACTIONFOREX

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Warren Takunda

Economic

European shares opened lower on Tuesday and gold hit $3,500 for the first time amid concerns over the US Federal Reserve’s independence after attacks on its boss Jerome Powell by President Donald Trump and the lack of progress on tariff negotiations by Washington.

The pan-regional Stoxx 600 index was down 0.51% in early deals at 503 points. Germany’s DAX was 0.34% lower, while Britain’s FTSE 100 bucked the trend to edge ahead 0.08%.

US indices closed sharply lower on Monday as traders returned from the Easter long-weekend break to an escalation in tensions between the White House and Fed chairman Jerome Powell over interest rate cuts, with an enraged Trump calling the central bank chief - whom he appointed - a "loser".

At the close, the Dow Jones Industrial Average was down 2.48% at 38,170.41, while the S&P 500 lost 2.36% to 5,158.20 and the Nasdaq Composite saw out the session 2.55% weaker at 15,870.90. Jittery investors took flight from US assets as bonds and the dollar both took a hit, while gold - seen as a safe haven - hit fresh records.

"The tariff tug-of-war still has no end in sight, and now the Powell power struggle is adding more fuel to the fire, with whispers from the White House about his potential ousting rattling already jittery investors. At this rate, even bad news might be seen as a buying signal - if only because something, anything, from Washington might offer a sliver of direction," said Hargreaves Lansdown analyst Matt Britzman.

"Markets are now itching for real progress on trade deals - posts from the President on Truth Social or X just aren’t cutting the mustard anymore. Investors want ink on paper, not just words, as a clear signal that movement is happening - and the clock is ticking."

"Gold dazzled past $3,480 per ounce, hitting a record high as fears over trade tensions and political meddling in US monetary policy sent risk appetite packing. Not to be outdone, the yen hit a seven-month high against the dollar, with investors saying yes to safety while turning their backs on shaky sentiment in US assets."

Over the Easter break, Powell said that with elevated uncertainty surrounding the impact of President Trump's recently implemented tariffs on the US economy, he now expects to see inflation rise and growth slow.

Powell said Trump's tariffs were "likely to move us further away" from its goals for "the balance of this year", while Chicago Fed head Austan Goolsbee cautioned that the tariffs will potentially cause the US economy to "fall off" by the summer.

In response, Trump said Powell's termination "can't come fast enough", with White House economic advisor Kevin Hassett stating the administration was currently looking into just that, leading to fresh questions around the central bank's independence.

Trump later demanded that Powell, who he called "Mr Too Late and "a major loser", lower interest rates "NOW".

In equity news, Novo Nordisk shares slumped on news that an experimental pill made by US rival Eli Lily worked as well as the Danish drugmaker's blockbuster drug Ozempic to lower weight and blood sugar in a trial of diabetes patients.

Source: Sharecast

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Blue River

Forex

Technical Analysis

Increased pressure on the Fed and rising geopolitical tensions continue to undermine the US dollar, supporting the EURUSD rally. The EURUSD technical analysis points to strong upside potential, with the next target at 1.1630.

The EURUSD rate is gaining for the third consecutive trading session, currently trading at 1.1530. Find out more in our analysis for 22 April 2025.

EURUSD forecast: key trading points

● President Donald Trump intensifies criticism of Fed Chairman Jerome Powell

● Traders are concerned about growing tension between the White House and the Federal Reserve

● EURUSD forecast for 22 April 2025: 1.1630

Fundamental analysis

The EURUSD rate continues to rally after rebounding from the 1.1475 support level. Pressure on the US dollar has increased following fresh verbal attacks by President Donald Trump on Federal Reserve Chairman Jerome Powell. On Monday, Trump escalated his calls for immediate rate cuts.

Market participants are increasingly concerned about the rising tension between the White House and the Fed. Trump’s actions could be perceived as an attempt to pressure the Fed’s independence, with speculation around a possible replacement of Powell adding to uncertainty and fear in the market, undermining confidence in the US dollar.

Additional support for the EURUSD rally came from investor disappointment over stalled US-China trade negotiations. Beijing accused Washington of misusing tariffs and warned other nations about entering trade deals with the US, which has increased tensions and further weighed on the US dollar.

EURUSD technical analysis

The EURUSD rate is on the rise after breaking above the upper boundary of the descending corrective channel. Today’s EURUSD forecast points to a continued bullish wave targeting 1.1630. Technical indicators support the bullish scenario, with Moving Averages maintaining their upward direction and the Stochastic Oscillator rising confidently from oversold territory, showing a bullish crossover between the %K and %D lines. Consolidation above the local resistance at 1.1555 will confirm the bullish scenario.

Source: RoboForex

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FastBull Featured

Daily News

[Quick Facts]

U.S. to hold peace plan talks with Ukraine and European allies.

U.S. "stock, bond, and currency triple blow": is Fed independence in question?

Trump-Powell Feud Fuels Inflation Concerns.

Goolsbee says Fed independence is 'critically important'.

[News Details]

U.S. to hold peace plan talks with Ukraine and European allies

Sources indicate the U.S. is likely to convene talks in London on Wednesday with Ukrainian and European officials as President Trump pushes for a deal to halt the Russia-Ukraine conflict. The discussions are expected to involve U.S. Secretary of State Marco Rubio, Trump's envoy Steve Witkoff, and Keith Kellogg meeting with foreign ministers and national security advisors from France, Germany, the UK, and Ukraine. Negotiations are still being finalized, though plans remain subject to change. The meeting follows last week's discussions in Paris, where the U.S. shared proposals for a ceasefire and peace agreement. Reports suggest the U.S. may ease sanctions on Moscow and recognize Russia's control over Crimea, the Black Sea peninsula in Ukraine, as part of a potential deal.

U.S. "stock, bond, and currency triple blow": is Fed independence in question?

U.S. stocks plunged Monday as Trump renewed criticism of Fed Chair Jerome Powell, demanding rate cuts. Growing signs that Trump's trade war is pushing the economy toward recession contributed to a sell-off in U.S. assets. The US dollar and long-term Treasury yields fell amid thin post-holiday trading.

Selling U.S. assets was Monday's main theme. U.S. Investors fear Trump may act on threats to fire Powell, triggering panic in markets. The 30-year Treasury yield surged 10 basis points, while bond prices diverged—long-dated bonds dropped while short-term notes climbed. Markets remain unsettled by the risk of Powell's removal, reassessing potential economic fallout.

Trump tweeted support for "preemptive rate cuts" and dismissed Powell as a "loser." His relentless attacks since last week have raised urgent questions: Can the Fed maintain independence from political pressure? Markets crave predictable Fed actions-uncertainty over independence could lead to erratic decisions, deterring investment-which the market dislikes.

Trump-Powell Feud Fuels Inflation Concerns

On Monday, U.S. long-term Treasury yields climbed and the US dollar resumed its decline after White House economic advisor Hassett stated that Trump and his team are still exploring whether to remove Fed Chair Jerome Powell. These remarks heightened concerns about the Federal Reserve's independence, with markets also fearing that this issue could lead to rising inflation.

The monetary policy consequences of Trump's tariff plans have left policymakers in a dilemma, as tariffs are expected to alter economic trajectories and push the Fed away from its dual long-term goals. There is a sense that inflation control—central to the Fed's mandate—is once again becoming a clearer priority. Powell has repeatedly emphasized price stability as a prerequisite for maximum employment, using firm language on inflation rather than focusing solely on job growth.

If Trump dismisses Powell, U.S. Treasury yields could surge sharply. The importance of central bank independence is remarkable in stabilizing long-term inflation expectations. While this debate has prompted investors to edge away from U.S. assets, a genuine credibility crisis could trigger a dramatic spike in long-term yields, far exceeding minor basis-point fluctuations.

Goolsbee says Fed independence is 'critically important'

Monday, Chicago Fed's Goolsbee delivered a speech: "The long run expectations that the Fed would get inflation back down to the 2% target were critically important. Fed independence is critically important for that. When there is interference over the long run, it's going to mean higher inflation, it's going to mean worse growth and higher unemployment, because there's just going to be a little less willingness to step up and do the hard things when the moment is tough."

[Today's Focus]

UTC+8 22:00 Eurozone April Consumer Confidence Index initial reading

UTC+8 18:30 ECB's Knot speaks

UTC+8 21:00 Fed Vice Chair Philip Jefferson speaks

UTC+8 21:00 IMF Releases World Economic Outlook

UTC+8 21:30 Philadelphia Fed President Patrick Harker speaks

UTC+8 22:00 ECB President Lagarde interviews with CNBC

UTC+8 01:40 Minneapolis Fed President Neel Kashkari speaks

UTC+8 02:00 BoE Deputy Governor Sarah Breeden speaks

UTC+8 02:30 Richmond Fed President Thomas Barkin speaks

Risk Warnings and Disclaimers

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Blue River

Technical Analysis

Key points:

Pound-dollar hits $1.34 in 11-day rally
$1.3430 resistance could spark reversal
Trump’s tweets now a top-tier market risk

It’s the turnaround point of a previous trend shift — $1.3430 could be a double-top pattern and bears are on the watch. Also, sterling is up a whopping 11% since mid-January.

📈Sterling Extends Winning Streak to 11 Days

Eleven green candles. One key resistance. Sterling’s on a mission. Thepair cracked above $1.34 on Tuesday, extending its rally to an impressive 11 consecutive winning sessions — the longest streak in years.
The pair has now gained 11% since mid-January, fueled by softening US dollar sentiment,cooling inflation in the UK, and growing expectations of a Bank of England interest rate cut just around the corner.

⚠️$1.3430 Looms Large as Double Top

But now comes a real test: $1.3430. That level marks a key technical barrier, where the price rolled over in a failed breakout attempt in late September. It’s a possible double-top pattern, and bears are watching it closely. A rejection here could trigger some profit-taking, while a clean break might unlock a fresh leg higher toward $1.36.
The move also reflects the broader macro backdrop — a market increasingly skeptical of the US dollar asTrump’s war of wordswith Fed Chair Jay Powell deepens, and confidence in central bank independence begins to wobble. That backdrop has sent flows pouring into alternatives like the euro, yen, gold — and now, sterling.

📪Quiet Week Ahead — Unless Trump Logs On

Looking ahead, it’s a quiet week with no major economic events on both sides of the Atlantic, giving the cable some needed space to go full technical — unless Trump decides to change that.
Trump’s notorious online posting is now on par with the most important scheduled economic events in terms of market impact. So beware of any sudden tweets by the US President as these may move markets fast, sharp, and in both directions.