Financial and Economic Analysts View US Dollar Highs Temporary

The analysts from Goldman Sachs expressed their insights regarding the US dollar’s latest holding of almost multi-month high. They noted that they do not anticipate a sustained greenback.

We want to share this latest foreign exchange update with our readers inside and outside the United States. We believe that it could strongly affect their forex activities this week.

The Goldman Sachs economic and financial analysts remarked that other central banks would need to consider policy normalization while their economies recuperate from depressed levels. They believe that the US dollar’s demonstration of near multi-month peaks against other major currencies today, June 21, will not continue.

The analysts also cited that the US Federal Reserve System’s latest dot plot was a meaningful surprise, according to the report posted online by business, financial, national, and international news outlet Reuters. They remarked that they could envision the euro/US dollar nosediving an extra 2 percent if European rates remain about unaltered.

The financial and economic experts from the multinational investment bank were alluding to a situation where markets carry on moving Fed pricing in a hawkish direction. The US dollar’s exhibition of holding almost multi-month peaks versus the other major currencies comes after the Fed surprised markets lately.

Last week, the US central bank signaled that it would conclude emergency bond-buying sooner than anticipated and raise interest rates. The US dollar index tracks the official currency of the United States versus six major currencies.

After gaining 1.9 percent last week, it stood at 92.232, and this figure is the index’s largest climb since March last year. The US dollar index also jumped above key resistance in the neighborhood of 91.95 last Friday, June 18.

This development marks a 61.8 percent retracement from its decline to 89.53 earlier this June and from an April 2021 summit of 93.439. Meanwhile, the safe-haven Japanese yen held firmer as the Fed’s hawkish tilt hit risk asset prices.

The currency ticked up to 110.185 yen to the US dollar. The Japanese yen also pulled away from a 2.5-month low of 110.825 yen last Thursday, June 17. As for the euro, it traded at US$1.1872.

On Friday, it hit a 2.5-month low of US$1.1847. The Australian dollar wobbled at US$0.7503. It had plummeted to as low as US$0.7478, a position last seen in December 2020.

The British pound traded US$1.3809. It stood close to Friday’s two-month low worth US$1.3791. We think that the US dollar’s current highs can either get sustained or otherwise in the coming days.

Several factors can affect this forex development. We believe that, as the United States reopens from the coronavirus or COVID-19 global healthcare crisis, the greenback can vacillate.

We also gathered the Fed’s shift toward a faster monetary policy tightening. This move was its organic response to economic growth, and specifically, inflation moving faster than anticipated, per James Bullard, the incumbent Saint Louis Federal Reserve President.

Many other reasons may make the US dollar sustain its highs and otherwise. The foreign exchange market is truly unpredictable, and so we recommend our readers always keep themselves updated with the latest reports and analyses.

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