Forex analytics. The dollar broke the rules of the game – ForexNews.PRO
There are decades when nothing happens. There are weeks when decades happen. The beginning of 2026 turned out to be so turbulent for the global economy, politics and financial markets that my head is spinning. The basic principles of fundamental analysis were violated, and FOMO inflated the EURUSD quotes to 1.19. However, is it any wonder when the system of international relations breaks down?
A strong economy is a strong currency. The fish is looking for where it is deeper, and the capital is looking for where it is possible to earn more. Forex exchange rate formation has been based on these principles for decades. The US GDP, according to the leading indicator from the Federal Reserve Bank of Atlanta, is ready to expand by 5.4%. Judging by business activity, the eurozone economy is far from shining.
Bloomberg experts do not expect a reduction in the federal funds rate until June. This means a wide differential with ECB rates, a greater attractiveness of American assets compared to European ones, a transfer of capital from Europe to the United States, and a drop in the EURUSD.
A horse can be led to water, but it cannot be forced to drink. The basic principles of fundamental analysis work in a calm market. At the beginning of 2026, it cannot be called calm. Politics definitely rules the ball, and when this happens, the economy nervously smokes on the sidelines.
Investors switched from American sales to TACO, but if stocks and bonds rose, then greenback turned out to be a scapegoat. The idea of hedging currency risks by non-residents investing money in American assets was revived.
Further – more. EURUSD opened the last week with a gap amid statements by Japanese officials about coordinated intervention in Forex life in order to stabilize the yen exchange rate. In 2024, Tokyo spent more than $100 billion on currency interventions. However, investors were much more scared by the word “coordinated.”
Immediately, associations arose with the Plaza Accord agreement in 1985, after which the USD index fell by more than 40% within two years. Given Donald Trump’s intention to increase the competitiveness of American producers with the help of devaluation, coordinated currency intervention does not look like a utopia. If the Bank of Japan has a large reserve of dollars to sell, then the Federal Reserve Bank of New York has an endless supply.
Fear has big eyes. The USDJPY has sunk deep enough for Japan to stop worrying about an excessively weak yen. The markets shoot first, and then they figure it out, so investors need to come to their senses.
