- The US dollar finds soil after intense sale in recent days of negotiation.
- Investors doubt the attractiveness of the world reserve currency due to Trump’s significant turns in the negotiation of agreements.
- The governor of the Fed, Waller, supports the relief of monetary policy under a scenario of large tariffs with a significant economic slowdown.
The US dollar (USD) gains temporary ground after stabilizing near its recent minimums, with the dollar index (DXY) bouncing its minimum of three years from 99.00 to 100.00 during negotiation hours in North America on Tuesday.
American dollar today
The lower table shows the percentage of US dollar change (USD) compared to the main coins today. US dollar was the strongest currency in front of the euro.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.29% | -0.29% | -0.19% | 0.27% | -0.68% | -0.87% | 0.27% | |
| EUR | -0.29% | -0.57% | -0.47% | -0.01% | -0.89% | -1.15% | -0.01% | |
| GBP | 0.29% | 0.57% | 0.09% | 0.57% | -0.32% | -0.58% | 0.57% | |
| JPY | 0.19% | 0.47% | -0.09% | 0.46% | -0.45% | -0.81% | 0.45% | |
| CAD | -0.27% | 0.01% | -0.57% | -0.46% | -0.90% | -1.14% | 0.00% | |
| Aud | 0.68% | 0.89% | 0.32% | 0.45% | 0.90% | -0.26% | 0.89% | |
| NZD | 0.87% | 1.15% | 0.58% | 0.81% | 1.14% | 0.26% | 1.15% | |
| CHF | -0.27% | 0.00% | -0.57% | -0.45% | -0.00% | -0.89% | -1.15% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper row. For example, if you choose the US dollar of the left column and move along the horizontal line to the Japanese yen, the percentage change shown in the box will represent the USD (base)/JPY (quotation).
However, the recovery movement could be ephemeral since the participants of the financial market are still concerned about the erratic tariff announcements of the president of the United States (USA), Donald Trump, which has led them to doubt the structural attraity of the US dollar.
Commerzbank analysts said: “With each turn in Trump’s’ negotiation ‘negotiation’, the US president further destroys planning security and even more confidence, so, ultimately, we do not expect a significant recovery in the US dollar while this uncertainty persists for all participants in world and economic affairs.”
Investors began to doubt the credibility of the US dollar after the declaration of a 90 -day break in reciprocal tariffs by Trump to all its commercial partners, except China, and its plans to reevaluate the car tax. On Monday, Trump said he is exploring temporary exemptions for tariffs on imported vehicles and related parts, since national cars manufacturers need more time to establish home manufacturing facilities.
In addition, the strengthening of moderate bets of the Federal Reserve (FED) due to the fears of an economic recession in the US for Trump’s economic policies has also weighed over the US dollar. On Monday, the governor of the Fed, Christopher Waller, supported the need for cuts in interest rates to combat a possible economic recession despite the fact that inflation expectations are kept high. “I hope that the risk of recession will exceed the risk of increasing inflation, especially if the effects of tariffs on increasing inflation are expected to be of short duration,“Waller said.
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
