In early June, one of our readers was indignant at Anthony Bondain's comment in his morning column: "How can anyone consider that NVIDIA is almost breaking even in 2025 when, if you take into account the fall in the dollar, it is still down 10%?" This post is symptomatic of many investors' misunderstanding of the effects of exchange rates on the performance of their stock portfolios. Our US selection is currently showing a return of 20% since the beginning of the year - expressed in US dollars. As European investors, you may be located in the eurozone, Switzerland or the UK. The performance of our selection expressed in local currency can therefore vary significantly; for the eurozone alone, it is cut in half...

The question of where the dollar is headed is therefore central and crucial to your allocation strategy. However, the Federal Reserve's estimate of the real effective exchange rate shows that the dollar has been abnormally high since the end of the gold standard and the Bretton Woods agreements.

Technically, the EUR/USD has entered a pivotal zone between 1.1575 and 1.1675, which it would be wise not to break through in order to avoid an acceleration of the European currency towards the 2018-2020 highs of 1.2340/1.2600. In such a case, hedging your US stock portfolio would be highly recommended.

In other news, the USD/CHF has almost reached its target of 0.8040 (lowest at 0.8055), while the USD/JPY remains above intermediate support at 142.00 without, however, managing to break through 145.70/146.60. Commodity currencies also remain well positioned against the dollar, with the USD/CAD breaking through its intermediate support at 1.3620, opening the way to 1.3416/3345. The Aussie is trying to break free from 0.6510 but is struggling to do so with any real momentum. This is not preventing it from gaining ground tick by tick, with 0.6700/25 in its sights. At the same time, the kiwi remains well positioned with unchanged upside potential at 0.6200.