Janet Yellen, who is about to become the first female US Treasury Secretary, pledged to return to a position of non-intervention on the dollar level on Tuesday, after Donald Trump's interventionist drift.

Janet Yellen was heard Tuesday before the US Senate, which is due to vote on her nomination as Joe Biden's Treasury Secretary. During this performance, held by videoconference from home due to coronavirus, the former boss of the Federal Reserve pledged to return to the traditional position of the United States, namely non-intervention on the dollar level

The greenback, which was in decline as of Tuesday morning, reacted little after Ms Yellen's remarks. The dollar index (which reflects its evolution against 6 reference currencies) fell by 0.28% to 90.51 points against this basket of currencies on Tuesday evening, while the euro gained 0.40% to

“I believe in market-determined exchange rates. The United States will not seek to weaken its currency to gain productivity,” Janet Yellen said. It also firmly stated that it would oppose any attempt by foreign countries to manipulate their own exchange rates

The dollar has lost 8.6% since the start of the Covid-19 crisis

The new Treasury Secretary also named China as the main strategic competitor of the United States, stressing in particular the determination of the Joe Biden administration to crack down on Beijing's “abusive, unfair and illegal” practices.

Outgoing President Donald Trump had broken with the tradition of non-intervention by regularly commenting on the level of the greenback, which he deemed too high. Since the election of the Republican billionaire in November 2016, the value of the greenback has depreciated by more than 10%, and it has fallen 8.6% since the beginning of March 2020, under the effect of ultra-accommodative monetary and fiscal policies in the United States to deal

Conditions met for a capped dollar in 2021

Basically, the dollar rate should remain under pressure in the coming months, as the new $1.9 trillion Biden plan to fight the pandemic will cause the budget deficit and government spending to slide, and therefore weigh on the US currency.

The Fed's sustained ultra-accommodative monetary policy, as well as the global economic recovery (which is encouraging American capital to invest abroad) should also prevent the greenback from appreciating this year. However, in the event of a correction in global financial markets, the greenback would serve as a safe haven, strengthening it at least temporarily

The probable fall of the greenback is not expected to exceed 2% this year, experts believe, except in the event of a deteriorated economic and health situation in the United States, which could shake markets' confidence in the dollar as the reference currency.