US Dollar Falls as Traders Anticipate Exchange Rate Correction

The dollar dropped against all of its major peers today as traders collected profits from the US currency’s strong rally that began once Donald Trump became the latest US President-elect. Trading volumes were thin on Friday after the Thanksgiving holiday in the United States.

The dollar touched its strongest level in 14 years earlier this week on increased investors’ confidence that Trump’s administration will boost fiscal spending to support economic growth and inflation rate to healthier levels in the US.

The greenback’s rally was also stoked by comments made by officials from the Federal Reserve, which hinted that the central bank might raise its interest rates as soon as next month. Federal funds futures, which is used by traders to take bets on the future prospects of US interest rates, showed a 93.5% probability that rates will be increased in December, according to the CME Group FedWatch tool.

Traders expect the dollar to quickly resume its rally, as higher interest rates make the currency more attractive to investors seeking higher yields. A predicted faster pace of increasing interest rates by the Federal Reserve to accommodate for higher inflation will further lift the US currency higher.

EUR/USD touched 1.0591 as of 17:20 GMT today, after touching 1.0626 at 14:21 GMT, its highest level since November 23. The pair opened trading today at 1.0551.

If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.

Leave a Reply

Your email address will not be published. Required fields are marked *