• The Fed’s interest rate policy favors the US dollar
• Jim Cramer expects end of rally
• Bears going into hibernation soon?
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Fed interest rate policy drives US dollar
The US dollar has benefited significantly from the interest rate policy of the US Federal Reserve in recent months. In order to get the high inflation under control, the currency watchdogs have recently raised the key interest rate again and again. This means that the Fed bankers are moving much faster than their colleagues from Europe, who only initiated the turnaround in interest rates with a delay. The greenback is therefore moving more strongly against foreign currencies – to the chagrin of companies that operate mainly outside the USA and suffer from unfavorable exchange rates. Import prices for raw materials, which are settled in US dollars, also rise for countries with weaker currencies.
US Dollar as “Last Remaining”
The soaring US dollar could soon come to an end, at least according to “CNBC” presenter and entrepreneur Jim Cramer. Based on analysis by author and strategist Carley Garner, who was a guest on Cramer’s show, the stock market expert expects the US currency to reach its turning point soon. “Everything else – stocks, commodities, bonds – have already marked a decline this year,” Cramer said on his recent show Mad Money will be.”
turning point ahead
According to Garner, the US dollar is known for “dramatic highs,” the last three of which follow a trendline that dates back to 2016. This could mean a turning point for the US dollar exchange rate, as the expert writes in an article for “The Street”. To do this, Garner consults the US Dollar Index, which compares the value of the US dollar across a basket of six currencies. “So far the dollar index has failed to close above 113.40 but it has temporarily spent some time above the pivot price,” Garner said. “As long as this remains as we expect, the dollar index will become increasingly vulnerable to gravity. In other words, it ‘should’ suffer the same fate as other asset classes – a reversal of trading to a more natural price level.” According to the analyst, the index would first drop to 105 points, after which it is possible that it could go down to 97 points – a level that prevailed before the start of Russia’s war against Ukraine.
US dollar sets the tone
“The strong US dollar has become a stumbling block in an already battered market, but now the charts, interpreted by Carley Garner, are finally suggesting that the US dollar may be peaking,” Cramer noted. And while the US currency faces a fate similar to that of the stock market, the entrepreneur nonetheless noted a correlation between the two. “It’s time to realize that the US dollar is calling the shots,” Cramer said shortly thereafter as the US dollar weakened slightly. “Today at least the US dollar rally has paused, which means the bears have also paused. If the greenback pulls back further, they may go into hibernation,” the moderator said.
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