Here's what comes next for the world's top currencies as Fed moves and global growth fears weigh on foreign exchange markets

CFOTO/Future Publishing via Getty Images

Foreign exchange market experts say the strength of the US dollar won't fall in the near-term.

The Federal Reserve is at the center of the dollar's jump, with policy makers attacking hot inflation with large interest rate hikes to slow the economy. The Fed's fifth rate increase this year is expected on Wednesday and will push the Fed funds rate up from its 2%- 2.5% range.

While the Fed is in the spotlight, investors' views on an economy's competitive strength can serve as a medium-term driver for currency. Growth concerns and shifts in the global trade environment are affecting the dollar's rivals. The US Dollar index has climbed to 20-year highs.

The Japanese currency, the euro, and the Chinese currency are being pressured by something.

The Japanese currency is called the Japanese Yen.

The Japanese currency has plummeted against the US dollar in the next four years. For the first time in more than two decades, the dollar has reached a new high. The Bank of Japan's commitment to bond buying to keep its 10-year yield capped has made the yen trade fascinating.

The yield curve has been controlled by the Bank of Japan. With the Fed's aggressive rate campaign, the US 10-year Treasury yield has soared close to 3.5%, making the bonds more attractive than Japan's.

The Bank of Japan could change policy at some point next year due to inflation with wage growth. The next policy statement will be released Thursday. Despite global central banks hiking interest rates, Bank of America doesn't see a change in yield curve control. BofA expects the dollar to rise on fears of de basement and capital flight.

The world's third- largest economy is experiencing a negative terms-of-trade shock.

Japan imports a lot of its food and energy. Food and energy prices have gone up more quickly than manufactured goods. He noted that Japan has swung from a trade surplus to a trade deficit.

The euro is a foreign currency.

The eurozone's shared currency is falling against the dollar for the first time in over a decade. The fourth quarter of 2022, and the first quarter of 2023, have a forecast fromBarclays. On Friday, it was worth $0.9950.

The European Union has been forced to store gas because of Russia's gas cuts.

The eurozone economy is so weak that it's slowing down. The people are struggling to make ends meet, according to an analyst. It's raised the cost of energy for businesses. Although the European Central Bank is hiking interest rates because of their mandate to control prices, sentiment towards the euro is not strong. Inflation in the euro area hit a record high in August.

Europe's energy crisis may not be fully priced into the euro until the winter season when it will become clear if the region has enough energy supply or not. It depends on the weather. The euro is going to be difficult over the rest of the year as Europe looks vulnerable.

The Chinese currency is called the Chinese Yuan.

The Chinese currency fell to a two-year low against the dollar this week, as the US currency hit a new high. China's currency is losing value this year. As it prepares for the next Fed rate hike, the People's Bank of China has worked on providing upside support by fixing the currency's daily rate above expectations.

Retail sales and industrial production beat expectations, but the yuan fell.

The Chinese economy is not doing well. The zero-concentration policy weakens the economy's growth potential. It's hard to see a way out of the policy. He thinks the dollar will go up to 7.20 per Chinese currency.

China's property sector is an important growth engine for the world's second- largest economy.

The cash register at the property market broke down. How can you minimize the damage is one of the questions China needs to answer.