The greenback has been on a slide since COVID-19 arrived in the United States, and a wonky change in the Federal Reserve’s approach to inflation may apply further downward pressure on the dollar in the future.
The U.S. dollar has depreciated notably over the course of the summer, with the U.S. dollar index (DX=F) falling to 92 at the end of August, a two-year low. Although the dollar has staved off further declines, forex analysts are warning that a weak U.S. dollar may be here to stay.
ING’s economics team says that a “significant bearish factor” for the dollar is the Fed’s intention to allow inflation to “moderately” overshoot its 2 % target. The framework change means the central bank is likely to hold pat on near-zero interest rates for even longer.
– Yahoo Finance