Recently, the US dollar has been under great pressure and has entered the early stage of a sharp descent. Unfortunately for the US currency, the downbeat statistics confirm the protracted downtrend. Thus, the dollar's real effective exchange rate (REER) fell by 4.3% in the period from May to August. Given the importance of this economic indicator, analysts begin to sound the alarm. The REER of the US dollar is a critical indicator reflecting the state of the monetary policy, inflation, trade, and the overall competitiveness of the US economy. In addition, an unprecedented plunge in the net national saving rate, which slipped into negative territory in the second quarter of 2020, is sure to expand the US current account deficit. It seems that the US dollar has nowhere to expect support from. Actually, the problems are accumulating like a snowball. The collapse of the US economy hit by the coronavirus, the increasing role of the euro as an alternative to the greenback, and the aggressive policy of the White House are weighing on the national currency. Obviously, the American dollar is found trapped by these negative factors. The US Federal Reserve will be unable to change the current situation in the short term. At the moment, the regulator is mainly focused on supporting the securities market rather than on tackling the inflation issues. Therefore, the decline in the US dollar might have just begun.
