Market news 26/01/24

The US economy continues to demonstrate impressive growth rates, making the American currency more attractive. The stability of the economy in the fourth quarter of 2023 provides support to the dollar due to two key factors: the maintenance of high interest rates by the Federal Reserve System and dynamic growth, unlike other regions where GDP is stagnating or declining. Economic analysts believe that the US may have structural advantages in the post-pandemic period, enhancing the attractiveness of the dollar for investors.

The US Dollar Index (DXY) is expected to exceed the annual maximum of 103.82 thanks to the GDP growth and the leading development of the American economy. Despite signs of deflation, the strengthening of the dollar is reinforced by positive GDP data ahead of the FOMC meeting. While Federal Reserve Chair Jerome Powell maintains a cautious tone regarding possible rate cuts, positive inflation dynamics, similar to those presented by the ECB last week, could accelerate expectations of rate cuts in March. It is predicted that the US dollar will continue its confident upward trend, surpassing the level of 103.82 in the near future.

The European Central Bank (ECB) conducted a survey of economic experts regarding forecasts. A decrease in inflation to 2.4% in 2024 (compared to the previous 2.7%) and 2.0% in 2025 (compared to the previous 2.1%) is anticipated. GDP forecasts are also being adjusted: growth is estimated at 0.6% in 2024 (compared to the previous 0.9%) and 1.3% in 2025 (compared to the previous 1.5%). Economic prospects have become less optimistic due to weakening demand and expected employment decline. The first quarter of the current year does not portend a recovery after the stagnation in the fourth quarter of the previous year.

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The information contained in this material should not be construed as trading recommendation. The analytical forecast is the subjective opinion of the author and cannot guarantee income.