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The dollar and the market: who will outplay whom?

In the past few weeks, the dynamics of the USD and the global market seem to be playing catch-up. Created
the impression that the American currency and the global market are competing with each other, who will bypass whom in the financial field.

By the end of this month, most traders, investors and economists expect further
reducing the greenback. By the end of spring, the “American” disappointed the markets, but a glimmer of hope for its recovery remains. Recall
that in the first quarter of this year, the USD showed significant growth, but now its fuse has dried up. By the end of April, the index
the dollar seemed to “run out of steam”, having left the race, and for the third week in a row it could not get out of the downward spiral.

Economists surveyed by Bloomberg estimate that over the past 12
months greenback has fallen in price against 16 key currencies, except for the Japanese. According to experts, in the next 12 months,
namely, until March 30, 2022, the dollar will drop against 11 out of 16 world currencies. This opinion is shared by market participants.
options, since over the past month put-options on USD have risen in price against similar call-options. Moreover, among investors
dominated by bearish sentiment for the dollar. Recall that the dynamics of option premiums reflects the balance of supply and demand,
which are determined by investor sentiment.

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Towards the end of April 2021, major market players reduced their net position for the purchase of contracts
on the dollar index to 3.5 thousand. Note that the decrease in the net position in USDX decreased from the levels that peaked at the beginning
June 2020. Over the past week, the “bullish” index of large players (that is, the ratio of the number of purchase contracts to
the number of sales contracts) fell to 1.17 from the previous 1.12. During the reporting period, large funds reduced USD purchases by 7%, while
increasing its sales. The continuation of this trend will lead to the collapse of the American currency, experts warn.

On Monday morning, April 26, the greenback began with a decline. This is facilitated by the weakening of interest.
against the US currency as a defensive asset and the rise of risk sentiment. Current risk appetite knocks the ground out
from under the feet of the dollar, whose position remains wobbly. Monday morning, April 26, couple EUR/USD traded near 1.2111, remaining in a bearish
trend. According to analysts, the pair EUR/USD is on its way to a maximum of 1.2350. According to the technical analysis, the achievement
this level (61.8% retracement) leads to sales to 1.1705. Currently, the tandem is dominated by bullish sentiment. According to
According to current calculations, the nearest targets of the “bulls” are the levels 1.2167, 1.2183 and 1.2200.

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Dollar doesn’t like Joe Biden’s plan

At the end of last week, experts came to the conclusion that the tax plan of the American president
Joe Biden brought down the markets. Recall that the main goal of the new taxation is capital gains in the United States. For financing
social spending, the head of the White House intends to double the rate of capital gains tax for those who earn
more than $ 1 million. The implementation of such a scenario will be a revolutionary step in the course of changes in the country’s tax code. However noble
an impulse to reduce wealth inequality can create a flurry of problems. First of all, this will lead
to the fall of the USD and US assets, analysts say.

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Another goal of the presidential reform is to normalize public finances. In the present
time, American Treasuries reacted positively to Joe Biden’s initiative, as the risk of an insolvent fiscal
politicians declined on expectations of growth in government revenues. However, in the mid-term planning horizon, the attractiveness of stock
US assets for foreign investors will decline. In this situation, the net effect for the greenback will remain negative,
summarize the experts.

According to Bloomberg experts, by the end of 2021, two-thirds of market participants expect the fall of the American
currency and further growth of European and British currencies. In the near future, the meeting should clarify the dynamics of the USD
Federal Reserve, scheduled for Wednesday, April 28th. Experts expect the interest rate to remain close to 0-0.25%
per annum and await new information about the future direction of monetary policy. Many market participants gave up on
dollar, but this is premature, experts say. Greenback is at a crossroads, and where he is heading, it will become known
in the near future.

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