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.

RELATED TERMS
  1. Dual Currency Service

    A dual currency service allows investors to speculate on exchange ...
  2. Currency Pair: EUR/USD (Euro/U.S. ...

    The Currency Pair EUR/USD is the abbreviation for the euro and ...
  3. National Currency

    A national currency is a legal tender issued by a central bank ...
  4. Reserve Currency

    A reserve currency is held by central banks and other major financial ...
  5. Currency Appreciation

    Currency appreciation is an increase in the value of one currency ...
  6. Currency ETF

    Currency ETFs (exchange-traded funds) aim to replicate movements ...
Related Articles
  1. Trading

    What Makes the EUR/USD A Risky Trade Now?

    What are the current risks of trading the EUR/USD pair? The Fed may raise interest rates this summer and the ECB has begun a quanitative easing program.
  2. Trading

    Profiting From a Weak U.S. Dollar

    Learn how to allocate your investments when the U.S. dollar is down.
  3. Trading

    Popular Forex Currencies

    Learn about the most traded currencies and the strategies used to trade them.
  4. Trading

    Currency fluctuations: How they effect the economy

    Currency fluctuations are a natural outcome of the floating exchange rate system that is the norm for most major economies. Read on for what effects these changes can have.
  5. Trading

    How to Calculate an Exchange Rate

    Struggling to get a grasp on exchange rates? Here's what you need to know.
  6. Trading

    The 6 Most-Traded Currencies And Why They're So Popular

    Regardless of the reason, forex is an integral part of 21st century finance. And the more widely used and reliable the currency, the greater the likelihood of people buying and selling it every ...
RELATED FAQS
  1. How can I trade in cross currency pairs if my forex account is denominated in U.S. ...

    The forex market allows individuals to trade on nearly all of the currencies in the world. However, most of the trading is ... Read Answer >>
  2. Is there a world currency? If so, what is it?

    There is no such thing as a world currency. However, since World War II, the dominant or reserve currency of the world has ... Read Answer >>
  3. How are international exchange rates set?

    Knowing the value of your home currency in relation to different foreign currencies helps investors to analyze investments ... Read Answer >>
  4. What are key economic factors that can cause currency depreciation in a country?

    Read about the causes of currency devaluation, and find out how to differentiate between relative and absolute currency devaluation. Read Answer >>
Trading Center