What is a 'Dollar Bull'

Not to be confused with a dollar bill, a dollar-bull is a forex trader or speculator who is optimistic about the outlook for the U.S. dollar(USD) against other currencies. A dollar-bull expects the U.S. dollar to rise in value compared most major currencies over time. They will consider this factor when positioning investment portfolios or entering trades. 

BREAKING DOWN 'Dollar Bull'

A dollar-bull trader will make financial strategies which include a strong dollar. Their actions will even tend to support and strengthen the currency. Dollar-bulls may hold the general view that it is sheer folly to bet in the long term against the U.S. economy and by extension the U.S. dollar. They might not know exactly which currency the dollar will outperform against, but they are firm in their view that it will exceed expectations. 

The USD bulls consider many factors to account for their view for both the USD and the quote currency of the currency pair. These factors include the economy, debt to spending ratio, market surplus, global commodity prices, and the geopolitical climate as a whole and their impact on both nations.

Currency pairs are the national currencies from two countries coupled for trading on the foreign exchange (FX) marketplace.  A widely traded currency pair is the euro against the U.S. dollar or shown as EUR/USD. In fact, it is the most liquid currency pair in the world because it is the most heavily traded. The currency pairs serve to set the value of one another, and the exchange rates will continuously fluctuate based on the respective changing values. One currency will always hold stronger than the other. The dollar-bull believes that stronger currency is the USD.

Dollar-Bulls and Dollar-Bears

The opposite of a dollar-bull is a dollar-bear. Bears believe that the value of the U.S. dollar will fall in relation to other currencies over time. A dollar bear expects the U.S. dollar to decline against major currencies over time and will take this factor into consideration when positioning investment portfolios and placing trades. 

For example, dollar-bulls could believe that the greenback will increase in value as long as it remains the world's dominant reserve currency. Being a reserve currency requires the backing of a stable and secure economy and government such as that of the United States. The post-war emergence of the U.S. as the predominant economic power had enormous implications for the global economy. At one time, its GDP represented 50% of the world’s output, so it only made sense that the U.S dollar would become the global currency reserve.

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