Forex analytics. The dollar has become the president’s toy – ForexNews.PRO
It would seem that the days when oil reacted to the sneeze of the Prince of Saudi Arabia are over. Thanks to Donald Trump, they are back. As soon as the US president declared that the fall of the US dollar was great and helped business, the USD index recorded its worst daily collapse since the April imposition of tariffs and reached its lowest level in almost four years.
What the owner of the White House wants, God wants. Donald Trump has long complained about other countries that devalued their own currencies. “It’s not fair. This is unfair competition.” And, of course, since the Republican took office as president of the United States, the euro has grown by 16% against the greenback, the Swiss franc and the Mexican peso by 19%.
The White House is pursuing a consistent policy of weakening the US currency. The proof is Scott Bessent’s words that there is nothing in common between the dollar’s price and the policy of a strong dollar, as well as the New York Federal Reserve’s request from dealers for a greenback sale rate against the yen. Why did the United States intend to help Japan? It is unlikely to maintain the government of Sanae Takaichi loyal to Washington. Most likely, coordinated currency interventions are part of the plan to devalue the “American dollar”.
Does Donald Trump realize that he’s chopping down the branch he’s sitting on? If foreign investors become convinced that the White House is serious about weakening the US dollar, at best they will increase the volume of hedging currency risks when acquiring American assets. At worst, they will stop buying them and start actively dumping them. How then can the Treasury close the colossal hole in the budget?
One of the beneficiaries of the collapse of the USD index is the euro. The risks of a EURUSD reversal, reflecting the ratio of insurance premiums from the growth and decline of the regional currency against the US dollar, have reached their highest levels since 2020.
Donald Trump’s antics are forcing Europe to follow China’s path. Actively support the economy with fiscal incentives and reorient exports. Is it any wonder that a free trade agreement has been reached with India, which the parties have been fighting over for several years? It will double European supplies to the Asian third economy market within 7 years.
Can the Fed save the US dollar? The solidly standing American economy and the long pause in the cycle of monetary expansion seemed like a bulletproof vest for the greenback. However, you need to gradually get used to the idea that even in a strong economy there may be a weak currency.
