Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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3 Factors That Affect the US Dollar Rate – Trading Strategies for Beginners

What factors affect the value of the U.S. dollar?

When investors decide to buy or sell U.S. dollars, the exchange rate is determined by the economic situation in the United States. A strong economy will attract investment from all over the world and is considered a safe investment environment due to its ability to produce good returns. When establishing a US dollar position, knowing the factors that affect the value of the US dollar is extremely crucial.  Investors need to evaluate the multiple factors that affect the US dollar to clearly assess the direction of the forex markets. There are three main factors that affect the US dollar’s exchange rate. 

1. The supply and demand of U.S. dollars

When a country exports products or services, there is high demand for U.S. dollars at such times, because customers need to pay for the products and services they need in U.S. dollars. At the same time, they must convert their local currency into U.S. dollars to make payments. In addition, when the U.S. government or large companies issue  bonds to finance their operations,  foreigners can buy these bonds and they  must pay in U.S. dollars, which they have to purchase by  selling their home currencies. Furthermore, if the U.S. economy is strong and the profits of U.S. companies continue to grow, foreign investors will be attracted to buy U.S. stocks. Such investments require them to sell their own currency in exchange for  dollars to purchase U.S. stocks.

2. Technical factors

To predict the U.S. dollar exchange rate trends, you have to consider various comprehensive factors.  In addition to supply and demand factors and market sentiment, historical data, and technical factors, such as seasonal trends, support and resistance levels, technical indicators, among others need to be considered. Many investors think that some technical price patterns will be repeated, so they predict future price movements based on price charts. 

 

ATFX-what-affect-us-dollar-rate

 

3. Market sentiment and public psychology

Sometimes  a country’s economy is down and consumption slows down because of rising unemployment. In such cases, the US may sell stocks and bonds to recover funds through exports.  so, investors will sell the U.S. dollar in exchange for their national currency.

As an investor, you must understand the U.S. dollar’s supply and demand relationship whether it is an oversupply or undersupply of the world’s reserve currency. In order to gain clarity about this, you must pay attention to critical news events, such as the release of various government statistics,such as employment, GDP and inflation data. In addition, other market and economic data can help investors understand how the economy is changing and assess its strength. Furthermore, it is necessary to identify the overall market sentiment, what financial market investors think the outcome of an event may be. Generally speaking, the market sentiment has a greater impact on the dollar than the basic supply and demand relationship has on the market.

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Last Updated: 21/01/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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