The key US stock market indices, Dow Jones, NASDAQ, and S&P 500, remain near their local lows and within the context of a global correction. On Tuesday, the indices traded in different directions, with some rising slightly and others falling slightly. However, these movements did not impact the overall state of affairs. We want to call attention to a non-obvious factor, namely, yesterday's significant strengthening of the US dollar. Recall that the dollar rose by approximately two cents per day without macroeconomic data and "foundation." Why did such a strong strengthening occur seemingly out of nowhere? Because the sentiment of currency traders has not changed. The United States dollar remains the world's reserve currency, purchased by everyone and everything when geopolitical tensions rise. Despite decades of recession fears and public debt concerns, the American economy continues to appear more promising than those of either the United Kingdom or Europe. The Fed's rate has already increased to 1.75 percent, which may reach 2.5 percent this month. The Bank of England and the European Central Bank cannot tighten monetary policy at the same rate. Consequently, if inflation declines in the near future, it will likely begin in the United States.
Moreover, the cryptocurrency market will decline as no one currently views "digital assets" as a profitable investment instrument. Accordingly, the recent recession in the American economy, which experts, analysts, and traders have been discussing, will not affect the stock or foreign exchange markets. Consequently, we anticipate a further 10-20 percent decline in the leading US indices. Since the rate will not increase indefinitely, it will not be possible to anticipate a turnaround in the US stock market until the rate approaches 3-3.5 percent.
