Forex analytics. The dollar has gone crazy – ForexNews.PRO
The “sell America” strategy in action! The Nasdaq Composite has its worst daily performance since October, with 10-year Treasury yields soaring to their highest levels since August, and the US dollar selling off on all fronts. EURUSD recoups all its losses in January in two days. Could it be otherwise? For decades, the United States has been perceived as a beacon of security. They went crazy under Donald Trump.
For the first time in the 119-year history of the Fed, the president is determined to fire the FOMC governor. Before his trip to Davos, Donald Trump draws the star-spangled American flag over Greenland, Venezuela and Canada on social media. He intends to replace the UN with his Peace Council and threatens France, which does not want to join, with tariffs.
Import duties are used as a form of coercion by the White House to achieve its goals. And when EU countries are discussing whether to launch an anti-coercion mechanism, US Treasury Secretary Scott Bessant urges them to remain calm and not take revenge. Behave the same way as after America’s Liberation Day, and everything will be fine.
The option that Europe will back down is the most preferable, according to the Polymarket betting market. He sees a 37% chance that by February 1, the United States will impose tariffs against at least one European country on the blacklist. The chances that it will be all 8 states are estimated at 17%. The EU, just like in April, shows its determination at the beginning of the conflict, and then, most likely, it will back off. The block is disconnected. Why would Italy support retaliatory measures if no one threatens it? Why would Poland go to war with the United States, exposing itself to the risk of losing the American military umbrella?
According to UBS, Europe will never allow itself to use the $10 trillion capital weapon mentioned by Deutsche Bank. It’s more expensive for yourself. The United States is the largest economy in the world, and its stock and bond markets are the most liquid and largest. Large-scale diversification of assets will bring huge losses.
Europe will either retreat and give up Greenland, or begin to take revenge from a small scale in the hope of de-escalating the conflict. A lot will become clear in Davos, and before that, the tension is likely to increase. As well as the volatility of the US dollar, the upward dynamics of which is one of the reasons for investors to dump the greenback.
