Dmitri Lysenko
2014 promises to be a good one for the US Dollar. At least, most analysts and currency strategists believe the US Dollar is a promising currency for Forex speculators this year, at least during the first half of the year. Wells Capital Management believes in the stability of the American currency.
Still there are factors that may influence the tendency. Meanwhile, some experts working for John Polson say that the real US GDP is going to grow some 3% in 2014. This factor is set to contribute to the strengthening of the US Dollar. Still, other economies may well show much stronger recovery, which may be a bearish factor for the currency.
The US Dollar has been considered the global reserve currency. This is due to its ability to withstand crises. However, this ability starts being exhausted. Market participants are getting increasingly interested in other currencies, especially those of emerging economies.
At the same time, some experts believe that the Fed’s continuous quantitative easing cannot influence the currency market anymore (it is played out). Further measures won’t affect the US Dollar since the market has already taken QE3 into account, including all the possible scenarios.
Still, the Fed is going to taper the QE program down to $75b a month, which is destined to provoke higher demand for USD, other experts believe. They do not believe that other economies will be able to outpace the US economy this year.
The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of EURSUD. The currency pair is currently trading around 1.377. The bias is bearish since there is a retracement underway.
Dmitri Lysenko
