The Monday trading session saw the dollar price take yet another dive. The trading value of the dollar slipped to a lower level as witnessed in the Forex trading session on Monday.
According to analysts, there are two factors behind the slump in the trading price of the dollar.
Stance on Interest Rates
The first reason has something to do with the likelihood of the traders who are still confused about the Feds’ decision over the monetary policy.
The traders are unsure about the next move the Feds are going to make about the interest rates. There is still a lot of uncertainty and confusion involving the interest rate hikes due to the inflation rates moving downward.
The inflation rates have been moving downward in the United States. This is not the first time the inflation rates have moved downward in the US in recent months.
The inflation rates have been constantly moving downwards but the Feds have not lowered their aggression against the interest rate hikes.
They continue hiking the interest rates as many key factors that make up the overall economy and provide important inflation-related information have continued providing a cushion to the Feds.
With this cushion, the Feds have continued hiking the interest rates. Now it seems that the Feds have decided to change that. There are speculations that the Feds may change their stance toward the inflation rates.
They may lower the interest rates given the fact that the inflation rates have declined significantly. This means that the inflation rates have long reached their peak level and are constantly in motion in the lower direction.
Jerome Powell, the Chair of the US Federal Reserve has hinted there might be declines or pauses in place for the interest rates. Still, there is no saying what the Feds will decide in near future.
The recent developments including the second reason may have a huge role to play in the upcoming interest hikes.
Banks are Going Down
The second major reason that may force the Feds to increase the interest rates is the crackdown being carried out by the regulators against the banks.
The banks are going after especially the banks that are trying to facilitate the entities from the cryptocurrency industry.
The US aims to kick out the entire crypto industry from its soil. Therefore, it is taking down the banks that are trying to set their foot in the disputed industry.
As per the regulators, the industry is harmful to the country’s economy. It has been struck off, otherwise, it will have severe consequences on the country’s economy.
With this ideology, the regulators have started to shut down the banks calling them the facilitators of such entities.
As of now, the Silicon Valley Bank and the Signature Bank have become the targets of US regulators.
The regulators seized the funds that were present in these accounts but they did announce a backstock for the depositors.
This means that the regulators will be paying back the depositors, which would have a toll on the country’s treasury.
Keeping these factors in mind, the traders have decided that they would reassess the situation of the interest rates. This is why the investments have slowed down in the USD, bringing their value lower.
DXY Data against the Major Currencies
The data suggests that the value of the dollar has dipped by 0.6% against the six major currencies. The value of the dollar has moved down to 103.528 in the recent session.
The value of the euro has experienced a 0.8% surge against the dollar price. It has reportedly moved up by 1.0730. The value of the euro has reached almost a one-month high against the trading price of the dollar.
The data shows that the trading price of the sterling has recorded a 0.6% surge against the dollar price, moving it up to 1.2105.