Forex Market: Dollar Maintains Short-Term Bullish Trend amid Global Pandemic. We explain the reasons for this international event.
The coronavirus has affected every sector of society, including the economy. It has devalued currencies globally, bringing the world economy to the brink of recession. This has generated a need to invest in Bitcoin Code currencies that have remained stable, and the dollar is on the list.
The economic uncertainty triggered by the pandemic, reaffirms the bullish profile of the U.S. currency.
The dollar and its upward trend
There can be no doubt that the US dollar has been one of the currencies that has benefited most from the health crisis. Therefore, the rising dollar is the news for investors.
Despite the worrying forecasts made by analysts regarding the future of the U.S. currency, its value has not only remained stable. It has even managed to keep rising every day.
And this Thursday was no exception. The U.S. dollar made gains due to investors‘ safe-haven purchases. These assets are for investors and companies to reserve their security in the market against future declines in the U.S. currency.
For, as fears about a rapid increase in coronavirus infections in some U.S. states increase, the need to insure your investments increases.
The currency rose by 0.18% to 97.41 points, touching, once again, its highest levels since June 2, giving grounds for the dollar to maintain its upward trend.
FED withdraws monetary liquidity. Will the dollar strengthen further?
The Federal Reserve and its decision making
The dollar and the Federal Reserve (Fed) have been market players since the beginning of the crisis that has hit the world in the first half of 2020.
As the crisis promised an economic collapse, the Fed moved to exaggerate the supply of dollars in the market. Against all predictions, those who saw the Fed’s accelerated issuance of money as a threat to the value of the dollar expected alarming results.
And as economic theory indicates, and it has been proven in countries where an overwhelming amount of money is injected into the economy, such an increase in supply leads to hyperinflation.
But this was not the trend that has been observed. For, the more stimulus the Fed announced, the more the price of the dollar rose. And with it, the value of major U.S. stock indices such as the S&P 500 or the Dow Jones, which also found themselves in an upward trend for a moment.