Will the US Dollar Drop Against the EUR/USD and CHF/USD?
You may be surprised to know that the dollar price movement in the market is influenced by foreign currencies and currency pairs, especially when trading from the US, because we are dealing with different economic systems. The currency market is very volatile and sensitive to any change in the balance of forces. In this article, we shall discuss the recent fluctuations in currency prices with respect to the EUR/USD and CHF/USD rates.
The EUR/USD rate has dropped to $1.2879 compared to the USD/CAD. This rate decrease occurred in the beginning of the month and prices steadily increased, hitting a new all-time high at $1.2956. The surge in prices prompted the government to announce the decision to intervene.
We now see that two of the three major US markets have made their moves against the US Dollar. On the other hand, the CHF/USD continues to maintain its position on the list of the most stable currencies, having no sign of weakening. It may be due to its low rate of 1.2573, however, the market is also affected by other aspects such as quantitative easing and the deterioration of the economy in the US.
Many analysts predict that the US Dollar will lose its position and weaken in the future. If this is true, then it would mean that many traders are making money by buying EUR/USD or CHF/USD pairs, which may not be what the market wants. This is why there are often debates in forums about whether the USD should fall against the GBP or not. Many traders argue that the USD will eventually lose its position and the GBP will become the premier currency, since it is valued at a higher rate than the EUR/USD.
The recent trend shows that the EUR/USD rate has remained relatively steady, while the CHF/USD has been rising more than the USD. Although some people have changed their belief that the USD will eventually depreciate, the situation is still a bit uncertain.
Traders may be blinded by the political and economic recovery in the US. One of the reasons is that a lot of investors are investing in Forex to earn a profit. As long as the US economy will be thriving, then investors will continue to have strong influence in the Forex market.
In addition, there is another reason for the success of the global economy, which we haven’t yet discussed, and that is the political intervention in several areas of the economy. To gain advantages and to establish a foothold in Forex, we need to understand and remember these geopolitical events.
Even though the political intervention has ended, some analysts believe that we should not forget the fact that there are certain external influences which can greatly affect the performance of the economy. The political instability may still be felt in various economic sectors.
For example, the dollar price for various goods in some huge areas has decreased. This means that the companies in these areas are quite inefficient and are not very competitive with the US companies, because they are being forced to devalue their goods to gain financial support.
This means that the dollar is affected by the political situation, because one thing is for sure: even if the economy is recovering, the political system of the country is still fragile and vulnerable. Sometimes, when the economy is still weak, it is easy to get stuck in a downward spiral, because the political instability is very difficult to handle.
The impact of the global economic crisis on the currencies in the US has forced them to devalue, forcing many foreign investors to leave their investments and sell their currency. They bought dollars, but now they are forced to sell them.
This is a clear indication that the European economic crisis is responsible for the trends we have seen in the US economy. But it is hard to say that it will lead to a decline in the USD/GBP trade.