The U.S. dollar continues to lose ground, and there is nothing surprising about this. According to the latest data, U.S. retail sales, like the labor market, continue to show slowing growth, while inflation remains a concern. This complicates the Federal Reserve's path in making future decisions. Meanwhile, Raphael Bostic, a Federal Reserve official, drew two important conclusions from his recent visit to the southeastern United States: consumers are increasingly concerned about their future, and tariff-related expenses are far more tangible than they may appear on paper.
In conversations with bankers, educators, and business owners in northern Alabama and Mississippi, Bostic, president of the Federal Reserve Bank of Atlanta, heard many insights: from the burden of high interest rates on loans that reduce business profitability and make home purchases more difficult for families, to the challenges employers face in hiring and retaining workers.
These conversations paint a complex picture of the regional economy, where steady growth is restrained by a number of factors that require careful analysis and possibly strategic intervention. Bostic noted that the high cost of capital puts significant pressure on business models, particularly for small and medium-sized enterprises, whose flexibility is limited. This leads to postponed investments in new technologies and production expansion, which in turn slows economic growth. At the same time, families struggle with home purchases, as high mortgage rates make property unaffordable for many. Another major issue is the shortage of skilled labor. Businesses face difficulties not only in finding qualified candidates but also in retaining current employees, especially in a competitive labor market. This creates additional costs and can negatively affect productivity and product quality.
At the end of his three-day visit, Bostic stated that he was open to adjusting interest rates in the near future but warned that policymakers should remain cautious while awaiting greater clarity on the economic outlook. "Today, I think my strategic approach is to move and wait," Bostic said in an interview. "It may take some time for the economy to recover after our step and start developing in a way that makes clear what the next step should be."
This balanced stance reflects the complexity of the current macroeconomic landscape, where the balance between stimulating growth and containing inflation requires fine-tuning of monetary policy. Bostic's statement underscores that the Federal Reserve does not intend to act impulsively despite existing economic challenges. Instead, the regulator prefers to adopt a wait-and-see position, collecting and analyzing data before making a final decision on the future path of interest rates.
This approach is driven by the need to consider multiple factors affecting the economy. In addition to inflation and employment, the Fed must also take into account global risks, trade tensions, and shifts in consumer behavior. Under these conditions, premature or unjustified changes to interest rates could lead to undesirable consequences for both economic growth and financial stability.
The head of the Federal Reserve Bank of Atlanta said he still considers one rate cut this year likely — provided the labor market holds up. "I'm not tied to any specific timing," he said.
As for the current technical outlook for EUR/USD, buyers now need to take control of the 1.1730 level. Only then will it be possible to target a test of 1.1770. From there, the pair could reach 1.1790, though doing so without support from major players would be quite difficult. The furthest target remains the 1.1825 high. In case of a decline, I expect significant buying activity only near 1.1695. If no buyers appear there, it would be better to wait for a renewal of the 1.1660 low or to open long positions from 1.1635.
As for the current technical outlook for GBP/USD, pound buyers need to overcome the nearest resistance at 1.3555. Only then will it be possible to target 1.3590, a level that will be difficult to break above. The furthest target will be the 1.3615 level. In case of a decline, the bears will try to retake control of 1.3520. If they succeed, a breakout of this range would deal a serious blow to the bulls' positions and push GBP/USD down to the 1.3480 low, with the prospect of extending toward 1.3445.
