Will the US Dollar Continue Falling Ahead of the Fed Meeting?

FXOpen

The US dollar has demonstrated a remarkable level of stability against its major counterparts, including the British Pound and Euro, over the past day.

Despite the ongoing two-day policy meeting by the US Federal Reserve Bank, the currency's stability remains largely unaffected. The Federal Reserve's policy meetings have historically been closely monitored by investors and have been known to trigger significant fluctuations in currency markets.

However, recent trends indicate that investors are no longer overly concerned about any major policy changes resulting from these meetings. The US dollar's resilience in the face of the Fed's actions suggests that market participants have come to accept higher interest rates as part of the current economic landscape.

In the short term, this sense of stability and adaptability has been bolstered by positive economic indicators. The United States government is poised to announce the GDP figures for the second quarter of this year (Thursday 15:30 GMT+3), with analysts predicting a steady boost of 2% over the previous reporting period. This indicates a consistent growth trajectory for the US economy, which may contribute to the US dollar's strength.

What factors will affect the USD going forward?

It is worth noting that some reporters have taken an overly short-term view. While the US dollar may appear steady against its peers at the moment, looking back over the past five days reveals a significant increase in the value of the British Pound against the US Dollar.

Check the GBP/USD chart

Indicative pricing only
Indicative pricing only

This suggests that investors have greater confidence in the currently steady, albeit plodding, British economy.

Comparatively, the US economy has displayed a slightly higher level of volatility, particularly in the tech industry. Interesting corporate movements in tech companies have contrasted with the more stable performance of traditional corporate giants on the FTSE 100 in the United Kingdom.

Looking ahead, the US economy appears to be on reasonably steady ground, and the US dollar has enjoyed a positive run. As such, the currency is expected to experience minimal volatility in the next few weeks.

Gone are the days of sensationalist news reports about failing banks, such as the aftermath of Silicon Valley Bank's spectacular high-profile collapse. Similarly, the concerns surrounding low-value tech stocks on NASDAQ that plagued the market last year seem to have subsided.

To maintain this relative stability, two key factors will be critical. First, the overall economy must continue to manage inflation effectively, as any sudden surge could unsettle market participants. Second, the Federal Reserve's future policy meetings must not spring any unexpected interest rate-related surprises, as these could cause uncertainty in the currency markets.

If these conditions are met, there is a strong likelihood of relative stability on par with that observed in the United Kingdom. Investors and analysts will continue to monitor economic indicators and central bank decisions closely, mindful of any potential shifts in the global currency landscape. For now, the US dollar's resilience remains a testament to its adaptability in the face of changing economic conditions.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Stay ahead of the market!

Subscribe now to our mailing list and receive the latest market news and insights delivered directly to your inbox.

Latest articles

Analysis of XAU/USD: Gold Price Sets Historical Record
Commodities

Analysis of XAU/USD: Gold Price Sets Historical Record

As the XAU/USD chart shows, on 16th July, the gold price rose above $2460 for the first time in history. The bullish sentiment is driven by:

→ Anticipation of Fed rate cuts, as the appeal of non-yielding bullion generally increases

Shares

US Banks Set a Bullish Tone at the Start of Earnings Season

Company earnings reports for the second quarter will be a crucial driver of stock market movements in the coming weeks. Traditionally, the largest banks kick off the earnings season, and their performance indicators today are setting a bullish tone.

For

The Dollar Corrected After a Sharp Decline. Will the Uptrend Resume?
Forex Analysis

The Dollar Corrected After a Sharp Decline. Will the Uptrend Resume?

A sustained decline in the core consumer price index in the US contributed to a sharp pullback in the American currency. The GBP/USD currency pair is trading near the psychological level of 1.3000, EUR/USD buyers are attempting

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.