The dollar is expected to continue to strengthen despite potential headwinds, according to



Despite the usual cooling off at the end of the year, the dollar is expected to continue to strengthen on the back of U.S. macro performance and the Fed’s hawkish stance. The dollar remains unaffected by the sell-off in U.S. Treasuries and the rise in the long-term yield curve. High U.S. interest rates and a disorderly rise in U.S. Treasury yields are seen as factors that could further strengthen the dollar.

Factors that could lead to a weaker dollar include weak U.S. macro data, a U.S. economic slowdown or a euro zone recession. However, these potential weaknesses are not expected to arise from a reassessment of growth prospects in China or Europe. High U.S. interest rates could disrupt the financial sector, which would initially boost the U.S. dollar as U.S. dollar funding conditions tighten.

Looking ahead to 2024, the short end of the U.S. curve is expected to decline ahead of the Fed easing policy, which could weaken the dollar. It’s worth noting that past rate cuts by the Fed have not resulted in gains for EUR/USD. However, it is expected to reach 1.10 next summer and 1.15 by the end of 2024.

This article was created and translated with the help of artificial intelligence and reviewed by an editor. For more information, please see our terms and conditions.


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