According to Robin Brooks, Chief Economist at the Institute of International Finance (IIF), the euro could become a deflation currency like the Japanese yen was before the Bank of Japan, under Kuroda’s leadership, launched unparalleled monetary stimulus in 2013.  While the Euro is strong in trade-weighted terms, it remains weak in real or inflation-adjusted terms. “That is not the equilibrium you want,” Brooks tweeted Tuesday.

As represented by the consumer price index, the cost of living in the Euro area fell into the negative territory in September. The negative inflation has triggered speculation that the European Central Bank would provide additional stimulus before the end of the year.

Central banks’ iron-clad independence appears to be waning due to attacks from politicians, according to a European Central Bank working paper. That’s according to a study that looked at 13 monetary authorities, accounting for 75% of global economic output, in the 2018-2019 period. The authors are Rodolfo Dall’Orto Mas, Benjamin Vonessen, Christian Fehlker, and Katrin Arnold — found that nearly half experienced a de-facto deterioration of autonomy.

With rate-setters having resorted to government bond purchases and other unconventional monetary stimulus measures, there’s been plenty of lambasting from politicians in recent years, prompting concerns the golden age of institutional independence might be ending.

They said “The deterioration in the de facto independence of central banks is a concern, as the reasons that helped forge the pre-crisis consensuses on central bank independence to achieve price stability remain valid today,”

Elsewhere, Traders were left looking puzzled this morning as President Trump’s twitter account caused havoc in the currency market. Trump has called for negotiators to stop any ongoing discussions with the Democratic party as their requests were unrealistic. President Trump has gone from hero to zero in a matter of days as traders previously cheered is Covid-19 recovery.

EUR/USD 4 Hour Chart:

Support: 1.1707 (S1), 1.1681 (S2), 1.1631 (S3).

Resistance: 1.1783 (R1), 1.1833 (R2), 1.1859 (R3).

As the ECB’s paperwork and the Brooks tweet impacts Euro unfavorably, we expect a bearish trend for EUR/USD.