Thanks to Donald Trump's fiery rhetoric and polarising opinions on immigration, it is hard to recall even the mention of economic policy during the property magnate's campaign. When he did talk about America's economic reform, he spoke loosely and without conviction, although it is widely believed that the former Apprentice host favours a slightly weaker dollar and more competitive exports to international markets.

With this in mind, many would have expected that the U.S. Dollar (USD) may have depreciated since Trump's inauguration, particularly given the chaos and uncertainty that has marked his first month in office. This is not the case, however, as the USD continue to perform robustly and within an elevated range, as it continues to dominate ailing currencies such as the pound (GBP) and the Euro (EUR).

The Dollar Holds Strong, But What is Driving This?

Of course, it can be argued that the strength of the USD has largely been derived from the weakness of other currencies. FxPro recently quoted the GBP/USD exchange rate at 1.2418, for example, with the pound taking another direct hit as British Prime Minister Theresa May prepares herself for another Scottish independence referendum. This will create further uncertainty in the UK, especially with Brexit negotiations scheduled to begin towards the end of March.

These factors have combined to hinder the pound, ensuring that it remains trapped in the middle of the range that it has traded against the USD since the beginning of February. With currencies such as the EUR and the Australian Dollar (AUS) having also depreciated significantly at the beginning of the year (although the latter has since rebounded), the strength of the USD must be placed in the context of how other major derivatives are faring.

So What Is Next for the USD?

With a quiet European economic calendar unlike to alter this scenario anytime soon, the immediate future for the USD appears to be bright. Even upcoming data releases such as the U.S. Durable Goods Orders report and Pending Home Sales are unlikely to have a direct impact on the performance of the USD, as the attention of traders remains firmly fixed on the White House and Donald Trump's scheduled address to Congress later in the week.

During this briefing, it is thought that the President will deliver further insight into his proposed taxation and economic reforms, ending much of the speculation that has persisted throughout the election campaign and initial period of governance. It is important to note that much of this speculation, which has been focused on higher levels of infrastructure spending and the cultivation of American jobs, has seen inflation forecasts rise while helping the dollar to sustain a recent rally that began with President Trump's election.

Should Trump's address to Congress showcase a reduced government spending forecast or renege on some of the core economic promises made during the campaign, however, the USD and the financial marketplace as a whole could take a significant hit. The same principle can be applied to the President's tax plans, especially as the controversial Border Adjustment Tax proposal has the potential to negatively impact on trade and create further, downward pressure on the USD.

With this in mind, the forthcoming address to Congress could well play a pivotal role in determining the future course for the USD. So while its outlook remains largely positive for now (particularly in comparison with other, major currencies) it could well be braced for a period of devaluation if Trump's economic plans disappoint.