In the past few weeks, opinion articles have been recurring in the main media of markets that anticipate a sharp fall in the value of the American currency. In terms of technical analysis, an upward break of $1.17 would open the way for a run on the Euro against the US Dollar up to the 2014 highs, close to $1.40, and this currency pair is now within a small wedge channel. which is limited to $1.05 and $1.145. On the fundamental front, the outlook is much more uncertain, because the strength or weakness of a currency today depends on many more factors than the simple local interest rate and economic growth, as it was until a decade ago.
With the force of central banks in boosting economic activity, far beyond their traditional mandates, the increase in balance sheets gave another variable to the value of a currency and at this point it is certain that the FED has opened the floodgates of easy money , it is also certain that the remaining main central banks have not been left behind. There are, however, two important particularities to take into account, the first is that for the time being the US Dollar continues to hold a monopoly of global importance, not only in the price of the main raw materials but also recently as a safe haven.
The second is that, as demonstrated in the 2007/2008 financial crisis, the US economy remains the most flexible, resilient and quick to react, opening the door to what, as has happened in recent years, the EDF may become the first to stop stimuli and raise interest rates, creating a divergence similar to that of 2014, which gave a strong boost to the value of the US Dollar, particularly against the Euro, hence there may be a drop in the short-medium term , unless there is something disruptive, the greenback will have good prospects to continue as the dominant currency for the next decade.
