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What Are the Main Factors Have Led the US Dollar to Outperform Other Major Currencies Recently?

Economic Report

It seems that it is a strong beginning for the US Dollar against the other major currencies’ basket, as the US dollar index –DXY– is showing a remarkable increase in front of the financial market’s participants for the second month in a row since the beginning of 2020. It was a very good thing for many investors and traders, for what they achieved from profitable returns over the past two months, as the economic factors and data were encouraging them to invest in the US dollar without the other major currencies.

Many investors and traders in the global financial and stock markets may ask about the factors and reasons that led to the superiority of the US dollar over other major currencies, and here we list three of the most prominent of these factors that led to this in this report.

Frist: The United States and China signing of the first stage of the trade agreement

Over the past two years, global financial and stock markets have witnessed a trade conflict, which may be the largest in history between the two largest economies in the world, the United States and China. This term has been termed by many experts and analysts around the world as a “trade war”. The matter has caused trade and economic losses over that period for both parties. However, after several rounds of negotiations over the past two years, the United States and China were able to sign the first phase of the trade agreement on January 14th, which restored the confidence of investors and traders in the US Stock markets as well as the US Dollar.

Second: Britain’s formal exit from the European Union

What Are the Main Factors Have Led the US Dollar to Outperform Other Major Currencies?
It seems that it is a strong beginning for the US Dollar against the other major currencies’ basket, as the US dollar index -DXY- is showing a remarkable increase in front of the financial market’s participants for the second month in a row since the beginning of 2020.

Britain’s formal exit from the European Union in late January without signing any kind of agreement or deals, which some call “Hard Brexit”, weakened the official currency of the European Union, “Euro”, which is the biggest competitor to the US Dollar on the currency market “Forex”. If we look at the chart above, we will find that the EUR/USD pair is in a clear downward trend from the beginning of February until now.

Third: NFP report adds 225,000 jobs to the US economy

In January, the US private sector employment report, NFP, added 225,000 jobs to the sector, compared to 160,000 jobs expected by experts and analysts. The report was positive for the US Dollar, in addition to being one of the main factors that supported the US Dollar against other major currencies. It is well known to investors and traders in the financial and stock markets that the NFP report is among the most important reports expected by market participants to assess the strength of the US economy.

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