The US currency, which is in the favorites of the market, has few current victories. It is striving for new heights, looking for various ways to reach the desired targets. Its efforts are most often successful.

Today, this currency remained stable against other world currencies, confidently trading near the annual high. It was supported by significant growth in the yield of US Treasury bonds, which is supported by expectations of a reduction in stimulus from the Fed. Markets believe that the regulator will begin cutting the QE program this November, despite the slowdown in the global economy.

Experts believe that the main background factor to strengthen the dollar was the hopes for the normalization of the Fed's monetary policy (MP). These expectations gave a strong impulse to the US dollar, which led to the growth of the EUR/USD pair across the entire spectrum of the market, breaking 12-month lows, and targeting the level of 1.1500.

According to preliminary calculations, the fourth quarter of 2021 may be a serious test for dollar bears. This is confirmed by the breakdown of key resistance levels in the EUR/USD pair. Last night, the instrument collapsed to the level of 1.1665, and then further fall to the lows (1.1603) of the end of 2020. This morning, the EUR/USD pair was moving around the range of 1.1576-1.1577, moving in a downward spiral.

In the current situation, the most affected party is the European currency. Unlike the steadily strengthening of the US dollar, the Euro can not hold its recovered positions. The total weakening of the euro pulls the EUR/USD pair to the bottom. It also prevents the stabilization of the pair's dynamics and distorting its further direction.

Despite the current victories of the US dollar, its medium- and long-term prospects are not too positive. An important factor that exerted pressure on it was the US macroeconomic statistics. The increase in the number of weekly applications for unemployment benefits in America slightly weakened the indicated currency. According to reports, the number of initial applications for unemployment benefits in the United States over the past three weeks has increased to 362 thousand instead of the projected 335 thousand. Nevertheless, there was another report that balanced the negative impact of the first one. According to the data provided, US economic growth accelerated to 6.7% in the second quarter of 2021. This was facilitated by stimulating government programs, due to which consumer spending of the population increased.

However, experts are afraid that the US dollar will strongly decline after reaching several heights. Economists are wondering how far will it go in an upward trend? According to the specialists' calculations, its upward movement will last for some time, but it will quickly subside. The fundamental factors hindering the strong growth of the greenback are the current economic instability in Europe, where the bad points are the situation in Germany after the elections, the economic difficulties in the UK after Brexit, and the slowdown in the US economy, where the key issue is still the need to curtail stimulus programs.

Analyzing the reasons for the long-term strengthening of the US currency, experts concluded that it is supported by reverse REPO operations. The greenback is getting more expensive, although the regulator is still "flooding" the markets with liquidity in the amount of $ 120 billion per month. The situation is mitigated by the so-called "sterilization" of liquidity, carried out using the reverse REPO mechanism. According to current data, American banks, with the help of the Fed, have increased the volume of such overnight transactions, achieving a new record of $ 1,415 billion. However, experts warn that the more money supply rotates in REPO operations, the stronger the potential risks for USD.

There are serious battles on the US fiscal front, the result of which is unpredictable. Many experts believe that America will face a serious challenge in 2022 – the so-called "fiscal cliff" problem. To patch up financial holes, analysts warn that large-scale consumer spending will be required, but they are also confident that the United States will cope with this problem, and the national currency will benefit.