US Dollar Outlook: DXY Down as USD/JPY & USD/CAD Drive Lower
A lot of traders’ analysts are forecasting a big change in the USD outlook for the remainder of the year, but many reasons are emerging that may actually be more positive than most investors are giving them credit for. Below are four reasons why the USD is set to rebound significantly after falling sharply during last year’s bear market:
The economic picture continues to look up: The current economic picture is looking very good. While the positive aspects of fiscal stimulus are beginning to show through, the negative aspects are being tempered. In fact, the global financial situation is beginning to improve and this will only benefit the USD.
Global economic growth continues to climb, which will bode well for the USD in the future: The strength of the USD is helping to fuel higher exports and solidify our place as the world’s leading export nation. As a result, our exports should start to slowly improve and make us a stronger currency in the long run.
The political turmoil continues to fester: Unfortunately, the political turmoil continues to fester around the globe. We have seen it with Europe and the Middle East and it will continue until the political problems are resolved. This could prove to be an even bigger drag on the USD in the coming years, but there are bright spots in the global picture that we should not overlook.
Central banks are beginning to take notice: This has been evident for some time now. The Federal Reserve is beginning to put its stamp on the markets and the political instability will most likely continue into 2020.
The US Dollar is strong: As mentioned above, the USD is heading toward an improvement. If the political situation does not get better soon, it will continue to slip lower. On the other hand, if it gets better soon, it will continue to strengthen until the end of the decade.
The Global Economy continues to improve: As explained above, the positive aspects of the fiscal stimulus are beginning to show through. This is causing a much stronger global economy, which in turn will drive higher the USD.
The Dollar will continue to strengthen: As stated above, the current global economic picture is looking very good for the USD. This is most likely due to the fact that the political problems in Europe and the Middle East are beginning to fester.
High-risk assets will still exist: When looking at any asset class, one needs to remember that risk can always be managed in a manner that keeps all assets at a stable level. This means that no single sector or country can completely take over the world.
This makes it almost impossible for assets to lose value for a long period of time, even when the fundamentals are weak. The USD has been managing to lose value for quite some time now, but it has begun to see some improvement in the last few months.
In addition, the overall economic situation will eventually make a rebound possible. The improved situation in Europe and the Middle East will make these areas less risky and therefore help create a brighter future for currency pairs like the USD, EUR, CAD and GBP.Strong economic prospects and a continued softening political landscape will certainly bolster the USD. It is a currency that has shown tremendous strength and resilience against the global economic picture during this tumultuous time in recent history.