Forex analytics. The dollar failed the tests – ForexNews.PRO
The rehearsal went badly. The US dollar rose only slightly as the United States economy accelerated in the third quarter to 4.3%, the highest level in two years. It is the revival of American exceptionalism that is the main risk for the “bearish” greenback forecast for 2026. However, his reaction to the GDP data shows that fear has big eyes. Are the “bears” on EURUSD really that hopeless?
Consumers continue to spend despite their pessimism about the economy, dissatisfaction with high prices and a cooling labor market. About 70% of GDP growth in the third quarter was driven by investments in artificial intelligence and consumption by Americans, especially high-income households.
However, Donald Trump prefers not to go into details. He announced that tariffs had made a major contribution to the excellent economic performance of the United States. Then the GDP will be even better! And no inflation! Moreover, the new Fed chairman will lower interest rates and help the stock market, rather than destroy it for no reason. Anyone who does not agree with this will not be at the helm of the central bank.
There are so many contradictions in these phrases of the president that you can’t help but understand the reasons for distrust of the US dollar. There can be no weak inflation in a rapidly growing economy. Warming up GDP to red is the main reason for the Fed’s rate hike, not reduction. A strong economy is a strong currency, and Donald Trump wants to see a weaker dollar.
Trying to combine incompatible things, the owner of the White House creates an ideal environment for American stock indexes. The so-called Goldilocks regime, when GDP is expanding rapidly and the Fed intends to cut rates. At least for the reason of helping the cooling labor market. This mode is unfavorable for the greenback. It is not surprising that he is ready to record the worst annual dynamics since 2017, the first year of the previous presidential term of Donald Trump.
According to the dollar smile theory, the USD index grows when the economy is doing well or vice versa, everything is bad. The first option is associated with American exceptionalism, while the second one stimulates demand for safe haven assets. However, if everything is really good with the US GDP, why would the Fed cut rates?
