US Dollar likely to maintain its position against foreign currencies over next 3 months, says Reuters Survey
According to FX strategists surveyed by Reuters, the US dollar will maintain its position versus the majority of foreign currencies over the next three months because of predictions that interest rates would remain higher for longer due to the strength of the domestic economy. Despite net short dollar positions reaching their largest level since March 2021, the dollar has increased by almost 3% (DXY) after it reached its lowest point in more than a year on July 14 due to waning expectations for Federal Reserve interest rate reduction.
The dollar's recent resurgence coincided with a decline in the euro's excellent previous performance; despite this, the euro is still up around 2.4% against the dollar for the year due to firmer predictions that the European Central Bank will stop raising interest rates. The dollar is unlikely to give up recent gains in coming months, according to the July 31-Aug.
2 Reuters poll of 70 FX strategists, which showed most major currencies would not reclaim their recent highs for at least six months, said Reuters in its report. 27 out of 40 FX strategists who responded to another query stated that net short USD positions will either not change much or decline over the following month, indicating that the dollar would be rangebound.
"The Fed delivered what very well might have been the last hike of the cycle. Inflation is falling and labour market rebalancing has come a long way.
Typically, these conditions often coincide with a more negative dollar outlook," said Kamakshya Trivedi, head of global FX at Goldman Sachs, according to Reuters report. "We still think that is the right direction, but think dollar depreciation will be shallow, bumpy and differentiated...dollar assets will provide a hard
. Read more on livemint.com
