The world’s leading currency has recently kept foreign exchange investors in suspense.
(Photo: Moment/Getty Images)
Frankfurt The US dollar has had an impressive rally this year. Just two weeks ago it was trading near a 20-year high. But now the world’s most important currency is weakening. Some foreign exchange experts are therefore already seeing a trend reversal for the dollar exchange rate.
The trigger is the significant drop in US inflation in October. This has led many pundits to scale back expectations about the scope of further rate hikes by the US Federal Reserve. However, the level of interest rates also determines the strength of a currency: the higher the interest rates, the more attractive a currency area becomes. If the Fed raises interest rates less than expected in the future, the dollar exchange rate is likely to fall accordingly.
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