US Dollar Slightly Weakens But Has Debilitated Other Currencies

The US dollar plummeted last week despite interest rate traders increasing their wagers for a 75-basis point interest rate hike at this month’s Federal Open Market Committee or FOMC meeting.

However, the United States’ official currency has continued to enervate other countries’ currencies.

We are quite eager to share this foreign exchange-related report with our readers, especially those holding US dollar units or are monitoring this foreign currency.

We believe this update will help them in their forex decision-making process this week. The US dollar accelerated lower last Friday, September 9, 2022.

It broke a three-week win streak, per the news report posted on the Internet by DailyFX, a website for financial market updates, forecasts, analysis, and charts and covers commodities, foreign exchange, and stock market indices.

The bulls had a problem clearing a trendline from May. Meanwhile, prices hit a fresh 2022 high early this week. The Relative Strength Index plunged below the 70-overbought level.

It is tracking toward its midpoint, and forex market analysts believe this trend may encourage more selling. Prices did not hold below the 20-day Simple Moving Average last Friday.

Nonetheless, a lower break would possibly threaten the August swing low. The US dollar’s latest performance is seen by forex market analysts as temporary and pointed out that looking at the big picture is significant.

The greenback’s sustained strength has left US citizens traveling overseas feeling roughly 14-percent more affluent compared to their financial situation at this year’s beginning.

Forex market experts explained this reality is because the US dollar has surged that much versus some of the world’s most traded currencies.

On the other hand, the greenback’s prolonged robustness has left countries and emerging economies with huge dollar-denominated debt balances hardly hit.

Sri Lanka’s repayment costs have carried on surging. This dire development happened after the South Asian country defaulted on its foreign debt last May.

Furthermore, the US dollar’s strength has adversely affected Argentina’s economy. The South American country’s government prohibited 31 imports it deemed non-essential several weeks ago.

These products include whiskey and yachts. The Nigerian naira has also plummeted. This situation has led to food prices that have driven inflation in Nigeria – Africa’s largest economy – to almost 20 percent annually.

The United States Federal Reserve System’s interest rate hikes have pushed the US dollar up to a 20-year high. This event involved investors likely getting a higher return if they park their funds in US assets.

Another factor that has pushed up the US dollar’s price relative to other foreign currencies is that most investors poured their funds into short-term Treasuries.

These risk-takers performed this measure in the face of tightening international financial conditions that the US central bank spearheaded.

Forex market experts explained that Fed chairman Jerome Powell is upping borrowing’s cost for the world each time he stands up to the podium to declare the US central bank’s next interest rate decision.

We feel dismal that the US dollar and US citizens are benefitting at the expense of the other countries’ citizens and their currencies.

We understand that the US dollar is the most widely utilized reserve currency. After all, the United States’ financial system and economy are stable.

At this point, the US economy is relatively calm, considering that it has a robust labor market. Nevertheless, other countries, including those in the eurozone, do not possess that cushion.

We want to note that the stronger greenback has prompted more interest rate hikes worldwide and decimated world currencies. This event happened as other nations’ central bankers attempted to increase their currencies’ value.

Several countries have increased their interest rate hikes’ speeds over the past few months, with rates in some territories now surpassing 10 percent.

We want to note that raising interest rates in countries where currencies are getting devalued also raises recession risks.

We hope other countries’ central banks will find more effective remedies. In this manner, the US dollar’s continued strength will not disadvantage the lives of other countries’ consumers.

24 Forex Secrets Copyright © 2017.