Trump Weakens the Dollar

Donald Trump wants a weak US dollar. The FED is strengthening the dollar through increasing interest rates in the USA. Two opposing views and objectives.

Trump believes that low interest rates will help him win his global trade wars. When interest rates are low investors move their cash out (sell their dollars) and seek out jurisdictions that offer a better return. This brings the value of the dollar down.

The upside for Trump and the US economy is that a weak dollar makes US exports cheaper and imports more expensive. The theory goes if exports are cheaper more countries will buy them resulting in a boast to the US economy.

The other real concern is that higher interest rates could expose the very high debt levels in the USA and become the trigger for the next recession there.

Trump is worried that he will be the guy who gets all the blame if this happens. Last Thursday he criticised the FEDs interest rate policy and said he will continue to do so weakening the dollar in the process.

Where do we got next? If we break the top blue zone on the chart we could see a move above 1.17 on EURUSD or back down to 1.15 if Trump turns his twitter account off.

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