The Dollar takes advantage of the elections to take off revealingly and leave its European rival on the side of the road

The dollar seems to reign supreme over the world… To the detriment of the euro.

The US dollar continues to reign supreme on the global currency scene, even in times of political uncertainty. Following the US elections, as the first favorable results for Donald Trump began to be announced, EUR/USD fell to 1.07, a sign of an immediate market reaction. But what are the underlying reasons for this dominance of the dollar and can we expect this to change?

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Undisputed dominance in the currency market

The dollar has reached record highs against almost all currencies, with the notable exceptions of the Russian ruble and Chinese yuan, which are less influenced by free markets. This dominant position can be explained in particular by the structural strength of the American economy, which contrasts with more moderate growth forecasts in regions such as the euro zone.

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An American economy in overperformance

Despite political turmoil, the American economy shows remarkable resilience. Growth forecasts stand at 2.7% for the current year, well above the 1.2% expected in the euro zone. This dynamic is supported by substantial public spending and a budget deficit which is expected to remain between 5 and 7% of GDP for the coming years. These structural factors promote an environment conducive to dollar strength.

Consumption and investment: The drivers of prosperity

One of the pillars of this strong economy is American household consumption, with approximately 60 to 70% of households categorized as wealthy. Studies show that 37% of Americans own a home worth more than $500,000, and 30% have investment portfolios of the same size, contributing to strong domestic demand.

American leadership on the stock markets

The American stock market, which now represents 50% of global stock market capitalization, remains the best performing of developed markets. High-tech companies, such as Meta, Google, Apple and Nvidia, are at the forefront of the digital revolution and attract the majority of global investment, with their stocks seeing record gains.

Capital flows to the United States

The surpluses of global corporations, financial institutions, and even household savings are increasingly being directed to the United States in search of attractive returns. This phenomenon, historically characteristic of emerging countries, is now also affecting Europe, with European capital being injected directly into the American economy, further strengthening the dollar.

Stability or change for the future?

No matter the outcome of the election, whether it is inflationary policy under a Trump presidency or incentives for the deindustrialization of Europe under a Harris presidency, the dollar is expected to maintain its supremacy. The American economy, with its solid structure and attractiveness for investments, seems ready to support this strength of the dollar in the long term.

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This article explores the continued dominance of the US dollar in the global currency market, despite political and economic uncertainties. By examining economic performance, consumption habits, and capital movements, we reveal why the dollar remains the currency of choice for investors and financial institutions around the world.

Source : iBanFirst

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