Should You Buy into an Expected USD Strength in 2022?

11 min read

Investing in currencies has been on top of everyone’s mind since the economic disbalance around the globe. Many wonder which currency is the fit for their portfolio and is it better to invest in other types of assets. Retrospectively, Trading currencies have only been meant for large companies and investors with huge wealth, but as the industry progressed Forex (Foreign Exchange) has become more inclusive and easy for all sorts of people.

This article is going to focus on the importance of the American Dollar as an investment, as well as the brokerage to use if you are familiar with the Forex market Unlike many others, American Dollar (USD) has yet to depreciate in value. Moreover, USD has grown by 11% compared to 2021. This currency has withstood many global conflicts, events and trends. So what’s so special about it and why should you invest in it?

Reasons Behind Dollar being so Strong

There is a phenomenon known as “Dollar Smile” which means that the USD performs well in both good and bad global economic situations. When the world starts to struggle financially, investors turn to the USD to invest money because it is perceived as safe to invest in, which ables the currency to stay afloat compared to its rivals. In times of economic roaring, USD still appeals to many investors because of its profitability. Because of this, the investment pool of the American dollar is always large. 

Besides the Dollar Smile, another unique thing about the Dollar as a currency is that it is controlled by American Federal Reserve also referred to as the Fed which controls the amount of money produced to the USA. The fed is known for its aggressive approach which leads to better interest rates, and higher yields for investors.  

Another huge impact on the USD’s strength is the overall economy of the United States of America. The vast development of technology, amazing real estate market and other factors make American investors a mecca. Because of the myriad of attractions which resulted in the increase in Dollar influx, the currency becomes stronger every day. 

How to buy into USD strength through Forex?

The benefit of using a forex broker as opposed to options trading is that you can get the same if not higher leverage, while not going through a more complex set of procedures. Adding USD to your portfolio would consist of putting buys on USD pairs against other majors (to play it safe), i.e. placing buys on EUR/USD, GPB/USD, JPY/USD pairs. To stay in for a longer term you would need to make sure your account’s margin is substantial enough to hold the position in an event of the USD temporarily depreciating against other majors. With such an approach it is still advisable to put loose stop losses and not overexpose your account with too much leverage and manage the trade on weekly basis.

How does the strength of the Dollar affect the Economy?

There is a general conception that a strong dollar ultimately results in better economic growth, though in some cases it might be true, the economic ecosystem is much more complex than this linear assumption. A strong dollar lowers import prices in the United States, which benefits Americans. Simultaneously, it makes foreign countries’ exports more competitive, boosting their economy. This explains why some countries try to discount their currencies in relation to the dollar.

So in other words, if the American currency is weak, your export can stay competitive in overseas markets. A stronger currency, on the other hand, might diminish export competitiveness and make the price of imported goods less, causing the trade imbalance to expand further and finally weakening the currency in a self-adjusting mechanism created and regulated by the Fed.

How can USD help to protect your Portfolio?

Though the rise of the American dollar causes major fluctuations and inflation in foreign countries it can be a great way to protect your assets over time. As mentioned before, compared to other types of assets or currencies, the US dollar is a very risk-free investment as proven through history. By following the logic, you should be looking to secure long USD through a broker in the Forex market.

Which Broker to Use to Go Long USD? 

Though many have figured out that investing and buying dollars is a good choice to protect assets not many know the right way to do it. In the Forex industry having a trusted broker might be the key to success. So if you are wondering which ones to choose from we recommend our top 3 Forex brokers, each better than the other. 

Key To Markets (KTM)

Key to Markets, often known as KTM, is a renowned FX broker based in London that provides financial services in Forex and CFDs on stocks, cryptocurrencies, and indices. KTM has been authorized by the FSC, FCA and DMCC, and it offers licensed and regulated access to many markets one of them being trading USD.

AvaTrade

AvaTrade, founded in 2006, has proven to be one of the safest, low-risk Forex, CFDs, and cryptocurrency brokerage firms. This reputable Forex broker provides its services not only on MetaTrader but also on proprietary platforms such as AvaTradeGO and AvaTrade WebTrader. AvaTradeGO is a mobile application that allows investors to manage their trading activity.

In terms of trading USD, if you are looking for an innovative application that is going to help you to purchase USD faster, AvaTrade is the right choice for you. 

XM

The firm has taken satisfaction in its tremendous effect on the financial market since 2009, having won multiple awards. With over 600 professionals who work for the firm and their combined knowledge, XM supports more than 30 languages, making it the greatest choice for every level of trader all around the world. As a consequence, XM has the greatest customer service of any FX broker on the market. The organization provides assistance 24 hours a day, seven days a week, with a friendly and individualized approach.

If you are just getting started in Forex and need guidance along the way, XM is the right fit. With their extraordinary customer service and help from experts on the market, you are going to find Forex a lot easier. On top of that if you are looking for more additional information about Forex, Check out our blog for Educational content.

How to Automate USD trading? 

The topic of Automated Trading has been gaining popularity with more people getting interested in this high-tech trading solution has become more accessible for mass consumption. In Forex, automated trading is also referred to as algorithmic trading and the name comes from the process of creating a trading robot, where a company develops an algorithm with set of technical indicators and parameters to perform trades for you. 

We can only vouch for our automated trading solutions. With the collective experience of more than 30 years, our team developed numerous Automated Trading solutions that are going to help you trade USD and secure your portfolio.

One of our most popular Expert Advisors, Athena EA has seen huge growth since 202. The robot is utilizing a grid-trading strategy and has a more aggressive approach to help achieving maximal possibilities. This trading robot has managed to grow by 200%

Key Stats: Values:
Historical Yearly Performance 220%
Historical Drawdown (DD) 30%
Risk Reward Ratio (R: R) 0.36
Profit Share ($0 upfront fees, 20-35% profit share)
Software Rental* €699 per year
Software Lifetime License  €999
Live Performance on 

*Software rental is only available through supported brokers.

 

The FAQ

Why is the dollar used for trading?

The relative strength of the US economy boosts the dollar’s value. That is why the dollar is a strong currency which increases its popularity in Forex trading and investing. Compared to other currencies USD has yet to see a decrease in value which makes it an absolutely important asset in traders’ portfolios.

How does a strong dollar impact trade?

Currency fluctuations have the greatest influence on international commerce, making imports less expensive and exports more expensive. A higher value of the US currency will help to expand the trade imbalance over time, putting downward pressure on the greenback and pulling it lower.

What happens to stocks if the dollar collapses?

If the dollar fell, the existing share price would rise due to hyperinflation, but the real worth of your shares would fall when compared to other currencies.

Safe Trading,
Team of Elite CurrenSea ♥️ 🇺🇦

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