When a country generates economic output with a Balance of trade deficit and Fiscal Deficit, that means borrowing funds from abroad and getting goods on credit. The USDollar won’t sustain these exchange rate levels. $dollar is another sign of financial markets’ disequilibrium and inefficiencies.
Only to get things into perspective. This chart’s the ECB Target 2 balance of €-350 billion euro. i.e. compensating as central bank clearing for Euro Area central banks and banks liquidity asset/liabilities mismatches.
that’s something marvellous Greece’s primary account €€+1.1 surplus, while the Euro Area €-19.9 billion deficit in the primary account, would derive from the Balance of Trade, which means the energy crisis has erased all balance of trade surpluses.
What about the $Dollar? The Fiscal Deficit in America for 2021 has been -$2.77 Trillion dollars, while for 2022 there’s an improvement at the moment of only $-946.0 billion.
What about the Balance of Trade? Both stats chart see a very large structural trade deficit in the American economy, which means also they import GDP from other countries, but that’s another thing. Anyhow American economy imports are $-600<$-800 billion dollar net deficit.
Part of these deficits are eventually balanced with capital inflows through the capital and financial accounts. Basically, $dollar flows into financial services, investments, Treasuries, and the stock market.
anyhow by simple math America’s Deficits are far larger than anything else. The FX market would not care until it does and the $dollar will have to be priced according to macroeconomic factors. And the $dollar exchange rate would be much lower.