Don’t waste your time – keep track of how NFP affects the US dollar!

Data Collection Notice

We maintain a record of your data to run this website. By clicking the button, you agree to our Privacy Policy.

facebook logo with graphic

Join Us on Facebook

Stay on top of company updates, trading news, and so much more!

Thanks, I already follow your page!
forex book graphic

Beginner Forex Book

Your ultimate guide through the world of trading.

Get Forex Book

Check Your Inbox!

In our email, you will find the Forex 101 book. Just tap the button to get it!

FBS Mobile Personal Area

market's logo FREE - On the App Store

Get

Risk warning: ᏟᖴᎠs are complex instruments and come with a high risk of losing money rapidly due to leverage.

76.5% of retail investor accounts lose money when trading ᏟᖴᎠs with this provider.

You should consider whether you understand how ᏟᖴᎠs work and whether you can afford to take the high risk of losing your money.

The US Dollar is Still the King, But!

The US Dollar is Still the King, But!

Information is not investment advice

Despite a slight decline from its highest levels since 2002, around 109 range, it is just a correction, and the green king, the US dollar, will resume its rally. 

On both sides of the dollar's strength equation, motives exist for it to continue its gains. One is betting on the continued weakness of its major peers, from the faltering European currencies to the weak Japanese Yen, as they suffer from their own problems. On the other hand, the Federal Reserve's insistence on keeping hiking rates and fear of recession will drive the demand for the dollar. The dollar is a winner in both cases.

Why is the US dollar so strong?

The dollar rose against the world's major currencies, heading for its biggest rally in nearly 40 years and the third largest since President Richard Nixon broke the dollar's peg to gold more than half a century ago. Many reasons are contributing to the dollar's strength since the beginning of the year:

1. The dollar benefits in all cases, whether during periods of outperformance of the US economy or recession. If risks increase, people seek the strongest safe-haven, the dollar. And if the economic outlook for the US flourishes, we see the dollar benefiting from this positive situation.

2. The Fed's commitment to raising interest rates until inflation returns to its 2% target, even if it will sacrifice some strength in the labor market and slowdown in the US economy.

3. The fear of recession leads to higher demand for the dollar.

4. A widening gap between the hawkish Federal Reserve and other central banks would lead to a stronger dollar.

-1x-1 (2).png

Why are the major currencies weak?

The rise of the dollar was manifested in the dramatic declines witnessed by the rest of the major currencies:

1. The Euro: 

The strength of the US dollar has pushed the euro to parity, the lowest level for the euro since 2002. The euro is unlikely to recover from its lows against the dollar until Europe emerges from the natural gas crisis sweeping the region.

2. Japanese Yen:

Hopes for a JPY recovery have faded, despite Japan's recent pickup in inflation. The dollar index is moving steadily towards 137 amid renewed interest in buying the dollar. The Bank of Japan's insistence on holding the ultra-easing policies will increase the yen's weakness against the dollar.

3. Gold: 

The dollar was the main obstacle to gold this summer. If the dollar index is not at 20-year highs, gold will be about $150 higher than current trading levels, according to Wells Fargo.

4. Even the Chinese currency reached its lowest level against the dollar in two years.

1661520880-4afece830c5c4894522cea2e2e484bd7_1200x1200_q90v3.png

Forecasts:

  • According to Bloomberg data and JPMorgan forecasts, the euro will fall the most against the dollar by the end of the year, as the single currency will drop to $0.95 by December.
  • RBC Capital Markets believes that the British pound will fall more than 5% over the same period to the $1.11 level.
  • The Commonwealth Bank of Australia expects the Australian dollar to fall to 65 US cents.

The dollar's ​​strength is hurting global trade and may hurt it too!

The main driver of global capital flows is trade. Almost all major commodities are traded in US dollars. A higher dollar will eventually result in lower global trade, with the price of everything higher in terms of foreign currencies. 

-1x-1 (4).png

Global trade is faltering, which means capital inflows are declining. The dollar's recent rally could cause global trade to fall - and thus lower demand for dollar-denominated assets - which could lead to weaker dollar demand.

The rapid appreciation of the dollar is even more harmful to emerging markets, whose central banks collectively move the equivalent of more than $2 billion in foreign reserves every day.

-1x-1 (5).png

The technical view supports the USD

On the technical side, all indications suggest that the dollar will continue to rise. All larger timeframes (daily/weekly/monthly) are bullish and optimistic, supporting the dollar's rally.

If the dollar index broke through the pivotal Fibonacci barrier at 109.14 and continued the break, it would be another strong bullish signal.

Buying opportunity

Despite the corrective movement of the dollar, all signs point to a return to the upside. So moments of weakness can be seen as buying opportunities before a possible retest at 109.00 and a potential new visit to 2022 high at 109.29.

 LOG IN

Similar

It’s Time to Look at New Zealand

Inflation in New Zealand is the highest since 1990, edging to 7.3% in Q2 2022. The currency is under heavy pressure as the Reserve Bank of New Zealand is trying to reverse the inflationary spiral. The week ahead will give us a valuable clue about the country’s monetary policy, and we are here to talk about that.

Popular

It’s Time to Look at New Zealand

Inflation in New Zealand is the highest since 1990, edging to 7.3% in Q2 2022. The currency is under heavy pressure as the Reserve Bank of New Zealand is trying to reverse the inflationary spiral. The week ahead will give us a valuable clue about the country’s monetary policy, and we are here to talk about that.

Choose your payment system

Feel the Team Spirit

Callback

Please fill in the form below so we can contact you

Select the best time for us to call you. We give calls from Monday to Friday in suggested intervals. In case we couldn't get through, we will try again at the same time the next day. For getting real-time assistance, use FBS chat.

We provide only English-speaking callbacks. If you prefer any other languages, contact the support team.

We will call you at the time interval that you chose

Change number

Your request is accepted.

We will call you at the time interval that you chose

Next callback request for this phone number will be available in 00:30:00

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later