The US currency is constantly under the pressure of economic factors. This week, the US Federal Reserve meeting became an indicator of its condition. According to experts, it determined the further dynamics of the dollar.
The result of the US central bank meeting was the preservation of the interest rate in the range of 1.50% –1.75%. Next year, the Fed intends to stop on the issue of rates. As for tightening monetary policy, these measures are possible no earlier than 2021. According to analysts, the current decision of the regulator led to a short-term decline in the greenback against world currencies.
After the Fed meeting, the European currency has significantly risen in price. According to experts, since the beginning of this week the euro has been pleased with the markets with its positive dynamics. The single currency was supported by the publication of positive macroeconomic data on Wednesday, December 11. Recall, the index of economic expectations of investors ZEW in Germany soared to 10.7 points from the previous -2.1 points, although experts expected a zero indicator.
Despite the prevalence of major sentiment, the market is far from positive. It is in suspense due to upcoming events, which include the ECB meeting and elections in the UK. Market participants were a bit confused by the recent speech by Fed Chairman Jerome Powell. He called the series of interest rate cuts recorded in 2019 a mid-cycle correction. Experts believe that this is a signal for the next rise in rates. According to analysts, after the stabilization of the situation, the Fed may begin to raise rates to target values. Many leading agencies gave negative forecasts in case of further escalation of the trade war in Washington and Beijing. Even if this conflict is resolved, next year US GDP growth will still slow down to 2.1%, experts emphasize. In a similar situation, the dollar will be under pressure, analysts said.
A slight fall in the pound's rate supported the greenback on Wednesday, December 11. The British currency is currently growing actively, while the greenback's position is a bit shaken. The EUR/USD pair showed an upward movement yesterday, reaching the level of 1.1093. Subsequently, the trend intensified.
The EUR/USD pair started on a positive note on Thursday, December 12, cruising in a high range of 1.1137–1.1138. The pair tried to gain a foothold at these levels, and managed to succeed for a long time.
Subsequently, the EUR/USD pair slipped to 1.1128. The pair found it difficult to stay on the conquered peaks, and slightly retreated.
Experts are certain that the upcoming ECB meeting will not pull down the EUR/USD pair and will not disappoint the market. They are counting on maintaining a balance between the greenback and the euro.
According to analysts, the long-standing struggle for primacy among the world's leading currencies has tempered the dollar. Experts believe that the greenback has developed the ability to withstand negative influences precisely in this fight. The US currency has gained stability and strength, which is demonstrated to this day, confirming its right to leadership.
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