The Euro has been growing stronger as the months pass but this hasn’t been the case for the US dollar. With the cryptocurrencies taking a plunge and most of them being based in America. The DXY retreated from its bull run.
It dropped by 3.2% just after it was at a 20-year high. The Dollar’s correction has preceded the 12 months of buying now. The dollar value against all of the foreign currencies. But the military conflict between Russia and Ukraine has rained on this parade.
With banks hoarding large amounts of currency this has led to a dollar over evaluation. The overbought dollar has now started weakening. Even the RSI value of the dollar has shown signs of plummeting.
With the ECB and Lagarde’s efforts, the EU is witnessing negative interest rates and this has led to the Euro gaining a lot of value in the last few weeks. The Euro is now stronger than the U.S. Dollar.
Businesses are booming in Europe which will further boost the economy and the value of the Euro. This will pressurize the US dollar even further. A declining DXY means that the value of the Dollar is declining as compared to other foreign currencies. Currencies from Emerging markets tend to underperform as compared to the dollar. But for the first time in 20 years, the Brazilian real and the Chilean peso have been performing better than the Dollar.
But this does not mean that this will be the case forever, on the contrary, the dollar will regain power due to the Fed’s intervention.