Dollar plunging prominently: "Despite Trump, the almighty dollar holds its unbeatable standing!"
Rewritten Article:
The greenback's reign is facing a struggle, with the ongoing trade war between China and the United States escalating over tariffs. But this turbulent period in the dollar's history hides a lucrative opportunity, as per James D. Touati, infamously known as "The Wolf of Zurich."
© Pixabay By Nicolas Gallant Economic Journalist, Financial Analyst, Technical AnalystPublished on
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The dollar plunged dramatically on the foreign exchange market in recent months. A sharp blow, as brutal as a sledgehammer. "My fellow finance sharks, brace yourselves! Donald Trump, true to his bulldozer style, dropped a bombshell: crushing 145% tariffs on China", noted James D. Touati (a.k.a "The Wolf of Zurich"), a consultant, educator, trader, and founder-CEO of The Nest, interviewed by our publication. This announcement sparked an eruption of volatility in the VIX (US stock market's fear index) and sent the S&P 500 (the premier US stock index, monitored more closely by fund managers than the Dow Jones, but often recognized by the public) plummeting like a rock in a storm.
To add fuel to the fire, Donald Trump exerted pressure on Jerome Powell and the Fed to slash interest rates while inflation topped the charts. Result? A wave of panic on Wall Street, the stock market in turmoil, with volatility skyrocketing... followed by an abrupt U-turn from Trump, who managed to calm things down and bring an end to the storm. But China wasn't about to back down: it retaliated with threats of sanctions against the United States and its allies, blacklisting several US companies while forming alliances in Southeast Asia to counteract Washington.
Could the euro surge to $1.20 in the foreseeable future? ## When the dollar returns fire on other currencies, the rise can be meteoric!
While gold continues to soar, shattering records at $3,500, don't be fooled by the hype: gold serves as a safe-haven asset, but it's not used for transactions on a daily basis. The dollar, however, still reigns supreme as the undisputed king of currencies, the cornerstone of the global monetary system, and it's set to stay that way, the expert asserted. Since 1969, the dollar has experienced only three substantial declines:
- From January 1969 to December 1979 (-33%)
- From May 1985 to August 1992 (-52%)
- From May 2001 to June 2008 (-41%)
But then the recoveries were nothing short of spectacular: +101% from December 1979 to May 1985, +55% from August 1992 to May 2001, and +61% between June 2008 and the recent peak, according to The Wolf of Zurich.
Even with the emergence of cryptocurrencies since 2009, none have managed to challenge the dollar's superiority. Trump "acted swiftly as soon as the greenback weakened and US bond yields rose, demonstrating that the dollar still boasts its major strengths", said The Wolf of Zurich, who advocates a buy for the dollar: when gold falters, the Greenback regains its luster. In this period of dollar decline, this "golden opportunity" has drawn foreign investors, who are jumping at the chance to invest in greenbacks heavily on US markets, causing the recent extraordinary rebound of US stock indices.
Donald Trump and the United States cannot tolerate a protracted devaluation of the dollar
Expanding on the situation: A continued slide in the dollar would have substantial ramifications, both domestically and globally. For starters, a weaker dollar would boost the competitiveness of US exports, making American-made products more appealing on the global market and potentially stimulating US economic growth, as well as reducing the colossal trade deficit. Conversely, imports would grow increasingly expensive, possibly encouraging businesses to bring production back to the US, a goal of the Trump administration, according to The Wolf of Zurich.
However, this depreciation carries risks: "It would penalize foreign investors holding dollar assets, reducing their purchasing power and potentially triggering capital outflows. Moreover, the rise in import prices could stoke inflation in the US, complicating the Fed's mission of controlling prices", warns James D. Touati. On an international scale, a weaker dollar momentarily weakens the value of dollar-denominated foreign exchange reserves. But this temporary weakness could lead some countries to hasten their move towards diversifying their currency holdings, such as the euro, hence enhancing the euro's role as an international reserve currency.
What have been the primary safe havens during this market chaos? ## The dollar continues to stand tall as the gold standard of foreign exchange markets.
Ultimately, don't be swayed by the ongoing swirl of volatility and political drama. The dollar, despite the turbulence, "remains the rock that supports the system—an immovable colossus with feet of clay as steady as steel. This latest storm is merely another chapter in a saga where the Greenback maintains its throne, despite the shaking and provocations. So, my friends, stay calm, keep a steady hand, and remember: in this game, the dollar reigns supreme", adds The Wolf of Zurich.
Investment letter Momentum, the premium publication on our website, accurately predicted the dollar's downfall in recent months and its impact on the stock market (including the performance of Wall Street and CAC 40 companies). Our stock selections have outperformed the CAC 40 since 2021, the year Momentum was launched. Enjoy the benefits of expertise and accurate forecasts by subscribing to Momentum—Sign up today!
- James D. Touati, often referred to as "The Wolf of Zurich," suggested that the recent plunge of the dollar could present a lucrative opportunity, given the escalating trade war between China and the United States over tariffs.
- In his interview, Touati emphasized that Donald Trump's announcement of crushing tariffs on China sparked an eruption of volatility in the financial market, causing the S&P 500 to plummet.
- Touati further advocates buying the dollar, as the greenback still reigns supreme as the cornerstone of the global monetary system, despite the ongoing turbulence.
- In the midst of the dollar's decline, foreign investors have been drawn to invest in the US markets, causing the recent extraordinary rebound of US stock indices.
