As we enter into the new year, the central banks of several countries are taking action to combat high inflation and keep their interest rates in line with the United States Federal Reserve. Although Japan and China are not following this trend, it is expected that the Fed's monetary policy will continue to shape the movement of exchange rates throughout the coming year. It's clear that these decisions are no small feat - the global economy is certainly in the hands of the world's top financial officials.
In recent months, the dollar has been on a roll - surging ahead against other major currencies. This is due in part to the Federal Reserve's decision to tighten the monetary policy in mid-2022. Experts predict that the Fed will put a pause to its tightening cycle come Q2 of 2023, once its policy rate reaches its peak of 4.5-4.75%. This level will surpass that of other major economies, aside from the UK. However, this may not be the end of the story, as there is the potential for the Fed to introduce additional rate hikes if US inflation and employment exceed current expectations. As the world lurches toward an economic downturn, the dollar has been hailed as the undisputed safe-haven currency. This coveted status has given it a boost, making it stronger against other currencies. However, our forecasts predict that this golden hour for the dollar won't last forever. We predict that by mid-2023, the dollar may slowly begin to depreciate and by 2024, this depreciation will speed up. This is due to a gradual decline in safe-haven demand, signaling a shift in priorities for investors. More detailed daily forecasts for Euro, Dollar and other currencies you can find on the LiteFinance blog by https://www.litefinance.org/blog/authors/dmitri-demidenko/ - a high-tech reliable ECN broker with a strong reputation.
The currency market has been experiencing some interesting movements, as the euro-dollar exchange rate has significantly plummeted throughout the year 2022. In fact, it even went below parity for the first time in two decades, causing some concerns among investors. Moving forward, it seems that things may get even more complicated for the euro zone economy as the energy crisis from Russia's gas supply issues might lead to a contraction. The ongoing war only makes matters worse, pushing energy prices upward and causing further damage to the region's trade terms. In fact, this crisis has already affected the current account, which swung into deficit for the first time in ten years.