Forecast for USD (US Dollar) in 2022 - Exiap (2024)

The US Dollar is often influenced by the health of the US economy, politics and trade.

1. US Economy

• When the US economy grows and unemployment falls the US Dollar often rises. Meanwhile when the US economy slows, the value of the US Dollar often falls. The US economic recovery is expected to continue in 2022 supporting the USD.
• When the cost of living, or inflation rises in the US, the USD often moves higher. Inflation rose sharply heading towards the end of 2022 which helped the US Dollar rise and is expected to rise at the start of 2022 before easing lower.

2. Politics

• US politics can have a big influence on the US Dollar. In 2022 the Biden Administration passed several spending bills which helped the US economy in its recovery from the pandemic.

• Policies favouring the US economy often help the US Dollar rise. More pro-economy spending bills could help the US Dollar higher.

• However, the US Dollar could fall if the Biden Administration wants to raise taxes.

3. Imports and Exports

• A currency performs well when both imports and exports are growing contributing to strong economic growth.
• The US is the world's largest importer and is the world’s second largest exporter (second to China). The US imports more than it exports but this hasn’t stopped it from being one of the most productive economies in the world.

GBP/USD performance in 2022

• Major banks broadly see the Bank of England raising interest rates in 2022 as the UK economy continues to recover from the pandemic.
• A robust economic recovery in the UK would match that of the recovery in the US keeping the currencies relatively stable around 1.33-1.35.
• Brexit issues also look set to drag on well into next year as the UK and the EU continue to try to resolve issues surrounding trades and the Northern Ireland border.

EUR/USD performance in 2022

• The US central bank, the Federal Reserve are expected to start raising interest rates before the European Central Bank, as the economic recovery and jobs market recovery accelerates ahead in the US.
• Given that a currency will often rise when interest rates are hiked, most major banks expect the EUR/USD to remain depressed in 2022.
• Analysts broadly agree that EUR/USD could reach 1.10 by the end of next year

USD/INR

• India was hit hard by the pandemic in early 2022. However, with covid cases continuing to fall and vaccination rates rising the outlook for India is improving, which is good news for the Rupee.
• Big companies going public on the Indian stock exchange have also supported the Rupee in 2022 and could continue to do so in 2022.

USD to CAD

• Major banks broadly expect the Canadian dollar to weaken slightly against the US dollar over the coming year.
• The price of Canada’s main export, oil, is expected to fall in 2022 after rising steeply across 2022. A fall in the price of oil could hurt the value of the Canadian dollar.
• Meanwhile, a stronger US economic recovery in 2022 could boost USD/CAD toward 1.30.

USD to JPY

• The Japanese Yen has been the worst performing major currency in 2022.
• The yen is considered a safe haven, so when the general mood in the market is upbeat, as it has been across 2022 amid the pandemic recovery, demand for the yen often falls.
• Should the market mood remain upbeat in 2022 the yen could continue falling.
• So far, the Bank of Japan has not indicated in any way that it is looking to raise interest rates, which is also hurting demand for the yen.