Investors Flee US Dollar As Trump Policies May Turn US Into Argentina. Forecast as of 11.08.2025
The US administration requires officials who can effectively execute its agenda. The Fed is following the lead of the US president. The Bureau of Labor Statistics (BLS) releases data that aligns with the Trump administration’s policies. The United States is experiencing economic challenges similar to those faced by Argentina. Does this align with investors’ expectations? Let’s discuss this topic and make a trading plan for the EURUSD pair.
The article covers the following subjects:
Major Takeaways
- The Fed’s dependence on data is an outdated approach.
- The labor market is more important than inflation.
- The US is turning into Argentina, and investors are fleeing the US market.
- Buying the EURUSD pair with the targets of 1.2 and 1.22 is currently a relevant strategy.
Weekly US Dollar Fundamental Forecast
The Federal Reserve should maintain its independence, but the new head of the central bank should utilize forward-thinking strategies rather than relying on historical data. Which of Scott Bessent’s statements is false? It is likely that both. The US administration’s objectives include the establishment of a puppet central bank and the manipulation of statistics. This approach carries significant risk and has led to a notable shift in investor sentiment, with many opting to avoid the US dollar.
What type of forward thinking is the finance minister referring to? Clarification is readily available regarding Stephen Miran, Donald Trump’s nominee for FOMC governor. He contends that the Federal Reserve officials’ perspective that tariffs will spur inflation and hurt GDP growth is obsolete. In fact, the US economy will benefit from import duties without any noticeable acceleration in prices.
The US administration has been a driving force behind significant economic policies, including the introduction of fees for foreign investments in the United States and the Mar-a-Lago agreement, which bears similarities to the 1985 Plaza Accord on coordinated intervention to weaken the US dollar. Since the beginning of the year, the US dollar has been weakening, and the debt market has been turbulent. As a result, the administration has not yet implemented Stephen Miran’s ideas. However, the possibility of these goals being achieved cannot be discounted.
Fed Chair Candidates’ Chances for Position
Source: Bloomberg.
However, safety is found in numbers. It is unlikely that a Trump appointee could alter the prevailing perspective of the FOMC. However, he does have supporters on the Committee. Michelle Bowman has stated that the apparent weakening of the labor market is more significant than the risks associated with accelerating inflation. Christopher Waller shares this perspective and is one of the candidates under consideration to replace Jerome Powell.
Meanwhile, Donald Trump’s criticism of the Fed may appear to have some merit when viewed in the context of the Bank of England. The BoE is lowering rates amid higher inflation than in the US.
US and UK Inflation and Unemployment
Source: Bloomberg.
However, the UK’s labor market and economy are weaker than those of the United States. The US is poised to receive fiscal stimulus and investment, while the Labour Party in Britain is deliberating on whether to deviate from budgetary guidelines or election commitments.
Indeed, there is a certain soundness to Bessent’s reasoning. Given the potential for data manipulation to align with the preferences of the US president, why should the Fed rely on data that may not be accurate? In Argentina, official inflation decelerated from 8.9% to 8.5% between 2006 and 2007, though in reality, it accelerated to 25%. The data enabled the central bank to adjust its interest rates in a manner consistent with the government’s policies. It is common knowledge that this decision led to a severe currency crisis.
Weekly EURUSD Trading Plan
If the US economy were to follow a similar path to that of Argentina, it would be ill-advised to invest in US securities. In any case, it is essential to diversify portfolios by allocating a greater share to European securities. Against this backdrop, the EURUSD pair may rally towards 1.2 and 1.22. The recommendation is to buy.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of EURUSD in real time mode
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