Dollar Price Moves Higher And Tightening By Feds May Increase Chances Of Recession

Dollar Price Moves Higher And Tightening By Feds May Increase Chances Of Recession

December 11, 2022 0 By Wiley McDermott

The latest trading session starting from the European market has seen the trading price of the US dollar (USD) move higher.

The report shows that the trading price of the dollar has stabilized from falling in the past few days. In actuality, the trading price of the dollar had been plummeting since the beginning of the running week.

Finally, the dollar seems to have stabilized and it is now showing signs of moving into the higher zone.

If that happens, then it will be one of many bullish sessions the currency has continued experiencing throughout the year.

The dollar is a Traders’ Safe Haven

Being the largest reserve currency, the dollar has its advantages and disadvantages. It is constantly at war and rivals other major currencies and countries with strong economies.

Still, the dollar has the ability to prevail somehow, which is why most traders move to the dollar whenever they sense trouble.

This time, the dollar price is surging because traders are concerned about the global economic situation. There is fear of a great recession throughout the world.

The traders are worried about their investments because the economic outlook of the entire world has not painted a good picture for them.

Therefore, the investors have directed their investments toward the dollar, causing it to stabilize and then move higher.

The DXY is Moving Higher

The Dollar Index (DXY) seems to be moving in an upward direction. The dollar has recorded a 0.1% push versus the six major currencies from all over the world.

It was quite an achievement for the bullish investors because they had seen the price of the dollar plunge 0.4% overnight. They were able to bring the dollar out of the bearish zone and form a strong rally.

Because of their strong buying efforts, they have managed to push the trading price of the dollar and the DXY into the positive zone.

All Eyes are on the Feds

It was only a month back when the investors had a breather when the Feds hinted that they would lower interest hikes in the future.

This led to a huge selling spree of the dollar, causing it to face the lowest yearly trading price. However, the recent data shared by the Feds has raised many concerns among investors.

Although the strong services and factory data shared by the Feds should be taken as a positive the current market situation demands a mixed approach.

The optimistic investors are worried that the Feds would use the opportunity to raise the interest rates with aggression.

Even though the hawkish approach would help push the trading price of the dollar, a positive sign for bullish investors but it comes with cash.

There is a limit and extent to which the interest rates can be increased, and beyond that point is a recession. According to the bullish investors, any further increases are already a knock at the door of recession.

If the Feds continue increasing the interest rates, then it would be welcoming the recession. The tactic that is proving to be fruitful now will become the biggest obstacle in controlling the economy.

Therefore, the Feds will need to find a way to deal with the situation and come up with the right solution that does not have any consequences.

The meeting between the Feds is to take place next week, which will decide the fate of the US economy and the dollar in the future.

Current Performance of the Dollar

At the moment, bullish USD investors can celebrate the upcoming surge of the dollar. In the recent trading market sessions, the value of the USD/EUR pair has experienced a 0.2% surge.

The value of the USD/GBP pair has recorded a 0.1% surge while the value of the UDS/JPY pair has recorded a 0.1% surge as well.