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Seeds of dollar recovery have been sown

The United States economy entered the pandemic stronger than its peers and has spent the most in its efforts to mitigate economic damage, sowing the seeds for a dollar recovery.

The dollar’s drop in the last 18 months and the effective easing that has for monetary policy also favours the United States in contrast to the effective tightening for other currencies, in particular the euro.

U.S. stocks are soaring for good reason and the prices of commodities, especially where the United States is a dominant producer, have rocketed. There’s plenty of good news in the pipeline.

The dollar has dropped over 8% since March last year but stopped short of vital tech levels that preserved the underlying uptrend for 2017.

From a longer-term perspective, the dollar’s recent decline is froth off the top of its huge gains since 2011. With traders betting heavily on a drop in contrast to the bullish bets they held before the pandemic there’s even fuel for a short squeeze.
Source: Reuters (by Jeremy Boulton)

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