Investing.com – Don’t expect the dollar’s recent rebound against the euro to last.
If anything, recent events may put new pressure on the U.S. currency, which already has a number of forces working against it.
For one, the European Central Bank’s decision to drop its easing bias added to expectations that it would end its asset purchase program by the end of the year.
Meanwhile, the possibility of a trade war after President Trump’s decision to impose steel and aluminum tariffs is likely to act as a drag on the U.S. currency.
The dollar was already suffering from concerns that the Trump administration’s would deepen the budget and current account deficits, known as the twin deficits.
In addition, slowing equity inflows to the U.S. show the dollar has become less attractive and a glut of new Treasury debt could make that situation worse.
Finally, there’s a growing perception that the Trump administration wants a weaker dollar to boost U.S. exports, even as its public policy statements say otherwise.
The dollar lost more than 10% against the euro in 2017 and dollar bears see at least another 5% decline in 2018.
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