The expectations of the future performance of the dollar were met. As analysts and traders in the Forex market expected the dollar to remain in a negative trend. Thus, although it had some upward moments, the greenback ended August with a minimum of 2 years.
At the beginning of the pandemic, the dollar was the dominant currency in the Forex market, then it faded as the weeks went by. Well, investors and traders took refuge in the US currency, taking it as a valuable reserve asset in the face of the crisis.
And against all odds, at the end of the first quarter of the pandemic, the dollar began a free fall towards a negative performance. This was due to the constant inflections and internal problems that the government of the American country was having.
The dollar gives way while waiting for Powell from the Fed
Dollar Closes Another Month of Negative Trends
The U.S. currency hit a two-year low against the euro on Monday, posting losses for the fourth straight month. This was in response to the U.S. Federal Reserve’s change in policy on inflation.
On Thursday, August 27, the president of the Federal Reserve of the United States gave statements that definitively changed the direction of the dollar and its operations in the Forex market.
Weeks before Powell explained the path to be taken by the Fed, the dollar had begun a slow recovery, which as the days went by vanished.
The bad streak seems to continue, because of the FED’s plan to focus on maintaining inflation at an average of 2%.
„The dollar bears have been the winners lately. After the Fed’s inflationary policy change, which should keep U.S. rates close to zero in the foreseeable future,“ Action Economics analysts wrote for Reuters.
Ripple CEO predicts further dollar decline
Dollar quotation to date
At the time of writing, the dollar index (DXY) was trading at $92.01, against a basket of currencies. Without a doubt, the green bill is facing strong pressure.
The DXY is down about 1.5% for the month, marking its worst August in five years.
Powell’s remarks last week reinforced a downward trend for the dollar. The Fed’s stimulus to counter the economic effects of the coronavirus pandemic has increased investors‘ appetite for safer assets with Gold and Bitcoin Profit, clearly damaging the U.S. currency.
Do you think the dollar can regain its strength if the U.S. changes its course in economic decisions?