#Fed# #Inflation# In 2001, a Morgan Stanley economist named Steven Jen coined the concept of the dollar smile. This model shows how the dollar behaves in different periods. According to the presented model, the dollar strengthens when the US economy is growing at a rapid pace (the Fed is tough and raises rates), as well as when the US economy is facing the threat of a recession. In between states where the US is growing slowly and the global economy is fine, the dollar is weakening.