By last week, when the war was going on in Israel and Iran, the US dollar was seen roaring, but after the war, it suddenly got hit and the breakdown has now come to a four-year low. With the increase in inflation in the US, the possibilities of recession have played an important role in weakening the dollar, while its breakdown has benefited the other currency Yen and Euro.
Dollar index reached here after slipping
According to the Reuters report, the dollar had been climbing with a strong rise till last week amid the ever increasing tension in the middle East, but as soon as the war stopped, it continued to decline. On Wednesday, Dollar reached a low of four years low on the last trading day. Us Dollar Index (DXY) has fallen to 97.48, which shows a decline of 10.1% this year. The biggest beneficiary of the dollar fall has been the euro and has reached $ 1.1700. Let us know that in the early months of this year, the dollar index had reached beyond 109.
Why did the dollar fall?
Talk about the reasons behind this major decline in the US dollar, so many reasons are being seen. Steve England, head of Global G10 FX Research and North America Macro Strategy at Standard Chartered Bank NY Branch, has said that the market is waiting for the next theme and this year the policy rate further reduced expectations have led to a weakness in the dollar.
Apart from this, US FED Chief Jerome Powell has expressed the possibility of increasing inflation in the country due to the tariff policy of Donald Trump administration in the US Congress. Apart from this, JP Morgan’s analysts have also said that Trump’s tariff policies can cause obstruction of global growth and can increase inflation. The agency has also expressed 40% of the possibility of recession. The direct effect of all this has been seen on the value of the dollar.
Dollar slipped, then these currency shone
While the dollar has slipped the index, Euro has increased 0.4% to $ 1.1700 due to its pressure, which is its high level after September 2021. Sterling rose 0.3% and reached a high level of $ 1.3723 after January 2022. If we talk about Swiss Frank, then it has gained a good lead over both dollars and yen. According to the report, the US dollar, euro and Swiss Frank reached many years of low due to concerns about US FED freedom.
Worry about freedom of US fed
According to the Wall Street Journal report, US President Donald Trump has considered the Federal Reserve Chairman Jerome Powell to replace another person by September or October. Meanwhile, Asia FX chief of Intch Capital Markets Kiran Williams says that any initial step of Powell’s successor can create a stir in the markets, especially if the decision on it seems to be inspired by politics.