What You Need to Know:

• Federal Reserve Chairman Jerome Powell’s congressional testimony focuses on interest-rate policies amid political pressures.
• Friday’s core PCE report is predicted to indicate lower price pressures.
• Concerns about the expiration of former President Trump’s tariff relief and ongoing tensions with Iran could significantly impact global markets and inflation expectations.

The calm in oil markets following a recent U.S. airstrike on Iran has defied bearish predictions regarding Bitcoin prices. With upcoming market events, attention turns to Powell’s semi-annual testimony.

Powell’s Testimony Insights

Jerome Powell is expected to face scrutiny regarding his decisions on interest rates, with potential criticism from Republican members for perceived financial losses attributed to his policies. However, he is set to uphold the Fed’s independence and the data-driven approach to rate adjustments.

Market anticipation surrounds Powell’s commentary on future interest rate movements, particularly concerning recent predictions from Trump-appointed Fed Governor Christopher Waller, who hinted at possible reductions in July.

“With the market’s pricing of future inflation well anchored, there are reasons for the Fed to consider a dovish shift in July.” - Chris Weston

This assessment could encourage increased risk-taking in financial markets, potentially benefiting BTC, which has maintained levels above $100,000 despite geopolitical strife.

Looking Ahead: Core PCE Release

The core personal-consumption expenditures (PCE) price index is due for release on Friday, serving as the Fed’s favored inflation gauge. Current estimates predict a minimal month-on-month increase of 0.1%, suggesting a growth rate of 2.6% annually.

Market expectations regarding a Fed rate cut hinge on the upcoming PCE data, though the influence of Trump’s tariffs is anticipated to build post-July.

Ongoing Iran Tensions

Despite a temporary lull, threats surrounding Iran’s actions could still affect oil prices globally. The cost of marine insurance for travels through the Strait of Hormuz has already risen significantly, illustrating the risks involved in these operations.

With these pivotal economic indicators and political narratives at play, traders are advised to stay informed as the week unfolds.