FX.co ★ USD to maintain its dominance in global markets

The US dollar continues to dominate the global financial system, according to leading analysts. Many experts are noting the dollar's triumphant return to prominence on the global financial stage after earlier predictions of a prolonged downturn were proven wrong. Investors have revised strategies that previously anticipated only a short-term dominance of the dollar and a swift decline in global trade by early 2024. Thanks to the robust US economy and persistently high inflation, the situation has shifted dramatically. The Federal Reserve now finds itself continually battling inflation, delaying the anticipated reduction in interest rates. The International Monetary Fund (IMF) has also adjusted its forecasts. It now expects US production to grow twice as fast as that of the G7 countries. This situation is likely to bolster the returns on stocks and bonds, subsequently enhancing the attractiveness of USD, especially amidst geopolitical unrest. According to Bloomberg, the current trader sentiment indicator suggests that the pessimism typical of early 2024 has given way to optimism regarding the dollar. This shift is prompting many financial experts to reconsider their previous strategies concerning the greenback, which continues to strengthen. Currency strategists at UBS Asset Management remain optimistic about USD, betting on the American currency which continues to rise despite a 20% increase in its value. Analysts at Wells Fargo are also positive about the dollar's prospects, predicting its growth will continue into 2025. The enduring strength and dominance of the dollar stem from its widespread popularity. Many countries find themselves needing to purchase dollars as they grapple with skyrocketing inflation, while others simply cannot keep pace with the economic growth of the US.