A Look at Why the U.S. Dollar Could Fall

Kathy Lien looks at dollar weakness

The U.S. dollar has been experiencing a certain amount of volatility. However, prior to the current fits and starts of economic recovery, the greenback was showing some strength as a safe haven currency. Now, with the economy on its way to recovery, the U.S. dollar could fall. Indeed, GFT’s Kathy Lien offers these 5 reasons in FX360 for future dollar weakness:

1. Fed exit from quantitative easing and economic stimulus is likely a long way off.
2. Other countries are diversifying their forex reserves.
3. Strong Q3 earnings are likely to translate into gains for the euro in forex trading.
4. There are twin deficits in the U.S.: Budget and trade.
5. The price patterns on the currency market indicate dollar weakness.

Chances are that, going forward, we are likely to see more dollar weakness, rather that a recovery, as forex traders begin to focus on the fundamentals.