The euro gained momentum against the greenback. However, the latter does not give up. It is asserting strength before a sharp rise. According to analysts, in the near future, the US dollar will soar to new highs, leaving the euro far behind.

On April 13, the greenback advanced considerably, touching the two-year highs. There are several reasons for it. To start with, it has a better outlook than the weakening euro. Apart from that, the US producer price index report was quite upbeat. The index increased by 11.2% in March, exceeding the forecasts. It logged the biggest rise since November 2010, the US Department of Labor emphasizes.

Despite the positive data, the upward momentum was short-lived. On 14, the US currency dipped due to a stronger euro. The latter is growing steadily ahead of the ECB meeting. Some analysts do not exclude that the regulator may keep the key rate near zero. Market participants hope that the ECB could raise the benchmark rate in the fourth quarter of 2022. As for the central bank's asset purchase program, its completion is scheduled for July.

However, the ECB may change its plans due to the worsening geopolitical situation. Before tightening monetary policy, the watchdog needs to tackle the issue of rising energy prices. Additionally, it is dealing with inflationary pressure, deterioration of consumer confidence in the eurozone, and a decline in wages. At the same time, many analysts are confident that the ECB will raise the interest rate, following the example of the Federal Reserve. If so, the European currency may start a rally.

FX strategists are less certain about the near-term prospects of the EUR/USD pair. Some of them argue that given the widening rate gap between the ECB and the Fed, the euro/dollar pair may significantly sink. Other analysts predict an increase of the pair to 1.0900–1.1000. Currently, the pair is unable to resume an upward movement due to the Russia-Ukraine conflict. This event affects the quotes of both currencies. On April 14, the EUR/USD pair was trading at 1.0917, gradually heading for new heights.

Therefore, the US dollar has more chances to pick up steam. Besides, its recent decline is just a short-term weakness, analysts reckon. The Consumer Price Index (CPI) was quite positive. It even showed a slowdown in inflationary pressure. Against this background, by the end of this year, the Fed may start tightening monetary policy at a faster pace. It is certainly bullish for the US dollar.

There is an opinion that Western sanctions against Russia will lead to a rapid transition to a new global monetary system – Bretton Woods III. It is based on payments for commodities in national currencies. At the same time, it may undermine the status of the US dollar as the main reserve currency.

Many analysts disagree with this point of view. They consider the Bretton Woods III system to be extremely unstable. The possibility of the transition of global trade flows from USD to other currencies has limited potential. Neither the euro, the yuan, nor commodity currencies can replace the greenback. They cannot compete with the US dollar when it comes to global settlements. They may only be used as an alternative in international settlements.