The US dollar is the main currency in a world economy and is dependent on the exchange rate of the dollar. This will determine how much is spent by individual as a simple example.
On the latest USD Forecast: US Dollar at Risk as the Fed, GDP Loom charts to watch, some can see that if the US Dollar continues to lose value against the Euro, the Federal Reserve will have to lower interest rates. If inflation stays the same as the Japanese are experiencing, then there will be a devaluation in the dollar. We’ll also have to add inflation to the price of living to determine the real value of the dollar.
The fall in the value of the dollar means inflation is higher and the prices of goods will continue to rise. If the Federal Reserve lowers interest rates there will be an increase in inflation and this will increase the purchasing power of money and most people will try to save more.
Even though the value of the dollar continues to drop, there will be a slow increase in its value as it loses buying power. This means we will not want to use it until we see a return of purchasing power. We need to watch the Euro and this will help us to keep a close eye on the value of the dollar.
While the Euro continues to gain and is currently above the dollar, the Euro continues to weaken against the US dollar. The Euro may move further away from the dollar but the same cannot be said for the dollar because of inflation. As more nations become wealthy, the value of the dollar becomes more dependent on the Euro.
At present, the Euro is sitting below the dollar and the Euro is likely to move even further away from the dollar. The Euro will likely depreciate and then move towards the US dollar. In addition, with the US dollar set to strengthen further, this may make it more difficult for the Euro to be bought or sold and this will increase the strength of the US dollar.
If inflation increases and the US dollar are weaker than the Euro, the strength of the dollar will move even more towards the Euro. The Euro will be forced to strengthen and the strength of the dollar will continue to weaken as the Euro continues to strengthen.
Even though the Euro is expected to move towards the US dollar, the EU is weak. It is possible that the Euro could weaken even further and the Euro will not be as strong against the US dollar.
This will make it difficult for the Euro to hold the value of the dollar and so it will become even more likely that it will be replaced by the US dollar. There will be a lower chance of the Euro losing all its value because of the weakened US dollar.
If the Euro moves closer to the US dollar than the Euro will need to strengthen further and this will increase the strength of the dollar. It will not be difficult for the Euro to break through the strength of the dollar and the weaker Euro will become stronger against the US dollar.
In order to beat the Euro, the weaker Euro needs to devalue further and this will encourage the strength of the dollar even more. In the meantime, the strength of the Euro will slowly make its way towards the strength of the US dollar.