E Hitting The Rock Bottom - What Does The Future Hold For The US Dollar?

The US dollar continues to slide in what is now referred to as the longest decline since 2010. Nevertheless, the US economy seems to be showing some positive recovery trends, as the total gains US stock market gains have reached 7% in the S&P 500 Index, outperforming Canada, Japan, UK, and Australia equity markets. Now that the end of the quarter is in sight, some new developments are to be expected. Investors, in an attempt to maintain appropriate risk levels and realign the market towards a more favorable value distribution. In order to do that, investors will be looking to sell over-performing currencies ( such as the US dollar) and buy those that performed weaker in the past quarter (such as the Australian dollar and the British pound). With the Bloomberg dollar declining by 0.2% on top of last week’s 0.5 % decline, experts are wondering what to expect from the USD in the coming months. 

Image by Gerd Altmann from Pixabay 

Why Is The Dollar Falling? 

Since March this year, the USD has been stuck in one of the longest periods of decline that the currency was ever subjected to, with an overall estimate of decrease reaching a total of 10%. Experts identify a number of reasons behind the US dollar’s sudden decline. 

First and foremost, one cannot overlook the state of turmoil to which America has been subjected throughout this year. Experts of the industry are largely divided over which factor should be regarded as the main catalyst of the dollar decline- some of the top foreign exchange firms name the US-China trade wars as the main driver behind the crisis, others blame the outbreak of the global pandemic and the inability of the US government to handle it adequately. On top of that, many are also referencing the wave of Black Lives Matter protests, the relative uncertainty of foreign exchange regulation and safety in the country due to political division, and the contrast between the US economy and the economies of other developed countries. Although no single factor has been singled out, it is safe to say that the combination of all those mentioned above has contributed towards the decline of the US dollar. 

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