Since the inauguration of Donald Trump, we have repeatedly heard the statement that the dollar is over-valued. Furthermore, some of the publically known conversations within the White-House openly discussed the undervaluation of European currencies, the yen and the Chinese yuan. All these remarks exerted quite an intense pressure on the US dollar, even despite the recent positive publications of the US macroeconomic reports. However, the overall attempts by the US dollar buyers were still quite substantial, which is due to the macroeconomic model – a strong economy equals to a stable currency.
“Buy on expectations, sell on facts.”
An additional factor toward the strengthening of the US dollar currency was the fact that many of the global market participants were expecting an increase of the US Federal Reserve’s interest rate.
As everyone knows, the majority buy based on the expectations; and the same case we could observe with the US dollar currency, which was quite actively bought, given the political pressure on USD.
As a consequence, at the moment the “fact” in this case raising the rate, the activity of sellers on the US dollar increased sharply. Most likely this is because most of the investors still expect further pressure on the American currency from the White-House.