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The US Dollar is the single most popular currency in the world, and is the dominant reserve currency in use around the globe. The USD is often called 'The Greenback' in reference to its green. MarketPulse is a forex, commodities, and global indices analysis, and forex news site providing timely and accurate information on major economic trends, technical analysis, and worldwide events.
The huge scale of the U. Interest rates in the United States were quite low during the credit crisis as the Federal Reserve tried to stimulate the economy, but worries about persistently high budget deficits and a growing national debt suggest a real risk of higher rates in the future. Because of the size of the U. Find out how the Fed manages bank reserves and this contributes to a stable economy.
The Economy Behind the U. Dollar Although the U. With the exception of the last three years of the Clinton presidency and the first year of the Bush presidency , the United States has run persistent budget deficits since and faces a growing national debt. What's more, future obligations to Social Security, Medicare, Medicaid and debt repayment create a significant potential problem for the economy. For related reading, see Breaking Down The U. The United States is increasingly a service-based economy.
Much has been made of the "hollowing out" of the U. Drivers of the U. Dollar There are numerous models and theories that attempt to predict currency exchange rates on the basis of relative interest rates, price levels, and so on. In other words, currency is like another "product" with extensive supply and price is determined by changes in demand. While demand for U. Data that makes the U. Accordingly, traders need to pay careful attention to the scheduled releases of economic data like GDP, trade balances, inflation and so on.
This data comes out at regular intervals and traders can not only find these numbers freely on the internet, but also the consensus expectations for these numbers. The already strong dollar gets an additional boost at the end of the day. Technically, the pair retains its bearish tone , as it met sellers ahead of 1. In the 4 hours chart, the pair failed to extend gains beyond a sharply bearish 20 SMA, which extends its decline below the and SMA, while technical indicators maintain firm downward slopes within negative levels.
The pair has a long-term strong static support in the 1. The bearish potential will ease only with a recovery above 1. There has been a notable shift in the structure in recent days, with the market pushing back above the top of the daily Ichimoku cloud.
This puts the major pair back in an uptrend for the first time since April. The Italian government reaffirmed its planned budget deficit, and EU authorities keep complaining it is against rules. Pouring some cold water on the matter, Italy's EU Affairs Minister, Savona, said that the country won't take any actions against the common currency.
As for data, the final version of the EU Markit Composite PMI showed that the manufacturing sector led growth slowdown in September, with the index down to The Services Index was confirmed at This Thursday, the macroeconomic calendar will be pretty light, with nothing of relevance to be reported in the EU and the US offering minor employment reports and August Factory Orders, these last, seen up 2. The Euro US Dollar can be seriously affected by news or the decisions taken by two main central banks:.
Another of its tasks is the one of controlling the money supply. Mario Draghi, member of the Executive Board, is also the President of this organism. Fed has two main targets: The FOMC organizes 8 meetings in a year and reviews economic and financial conditions.
Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. His declarations are an important source of volatility, especially for the Euro and the currencies traded against it. Draghi gives press conferences in the back of how the ECB observes the current European economy. His comments may determine positive or negative trends for the Euro in the short-term. Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February , for a four-year term ending in February His term as a member of the Board of Governors will expire January 31, Born in Washington D.
Powell served as an assistant secretary and as undersecretary of the Treasury under President George H. He also worked as a lawyer and investment banker in New York City. From through , Powell was a partner at The Carlyle Group. This group also includes the following currency pairs: The popularity is due to the fact that it gathers two main economies: This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency.
Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions.
At noon activity slows down as traders step out for lunch and then picks back up again as the U. If there is important U. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American from United States of America. The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. This fundamental information helps me understand what reports and indicators the economists of the world believe will shape future events.
Do you notice that with each price change the intervals are always a minimum tick of. And then at the end of the day when you look at your daily candle of the USDX you see a closing price like US Dollar Index approaches It then evaluates how many of these crosses are on bullish mode.
Preferred brokers in your location. These currencies are the Euro constituting The index started in -with the absolution of Bretton Woods- with a base of For example, if the current reading says
Loss of confidence in the dollar and the creditworthiness of the United States. US Federal Reserve's head, Jerome Powell, stated that the central bank can raise rates past the "neutral" level.
Fiscal policy will overtake the monetary policy in stimulating the US economy. The Euro has increasingly become a funding currency, amongst others because rates are so low, speculators are borrowing in euros to buy higher yielding assets.