US Dollar: Fed-driven strength and revised path – OCBC

Source Fxstreet

OCBC’s Sim Moh Siong and Christopher Wong highlight that a more hawkish Federal Reserve and flatter US yield curve have replaced high Oil prices as the main support for the Dollar. Their new forecast sees EUR/USD at 1.11 and USD/JPY at 163 by year-end, with DXY projected to gain 2–3% and low-yielders like the Swiss Franc and Japanese Yen under pressure.

Fed signals underpin stronger Dollar

"The USD strengthened despite weaker terms of trade from lower oil. A more hawkish Fed and flatter yield curve have replaced high oil prices as the main support for the USD."

"Two messages stand out from the hawkish Fed signals. First, it has reassured markets on policy independence, triggering an unwind of debasement trades through lower gold and crypto, a flatter curve and a stronger USD. Second, with the Fed back in focus, the USD is realigning with rate differentials after the earlier dislocation during the energy shock."

"New USD forecast: EUR/USD at 1.11 (previous: 1.18) and USD/JPY at 163 (previous: 155) by year-end. Hawkish Fed signals lift USD, shifts our view to modest strength from rangebound. DXY breakout targets 2 to 3 percent upside; 5 percent move requires oil surge or US overheating scenario."

"A firmer USD alongside widening rate differentials tends to weigh most on low-yielders such as CHF and JPY. Procyclical carry can still perform, but trade resilience will depend on selecting appropriate funding currencies."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Broadcom Sales Miss Sparks Profit-Taking Rout in Asian AI and Chip StocksAsian semiconductor and artificial intelligence shares tumbled after Broadcom’s mixed quarterly results and flat sales guidance triggered widespread profit-taking, exposing the tech sector’s vulnerability following a massive May rally.
Author  Mitrade Team
6 Month 04 Day Thu
Asian semiconductor and artificial intelligence shares tumbled after Broadcom’s mixed quarterly results and flat sales guidance triggered widespread profit-taking, exposing the tech sector’s vulnerability following a massive May rally.
placeholder
Iran Missile Strikes Trigger Oil Surge as Middle East Ceasefire CollapsesOil prices jumped over 2% in Asian trade after Iran launched retaliatory missile strikes against Israel, threatening the Strait of Hormuz and erasing hopes for a lasting ceasefire.
Author  Mitrade Team
6 Month 08 Day Mon
Oil prices jumped over 2% in Asian trade after Iran launched retaliatory missile strikes against Israel, threatening the Strait of Hormuz and erasing hopes for a lasting ceasefire.
placeholder
US Attacks Iran Amid the “Ceasefire”: Bitcoin, Gold, and Oil ReactThe United States launched strikes against Iran on Tuesday after a US Apache helicopter was downed over the Strait of Hormuz, breaking the fragile ceasefire previously announced by President Donald Tr
Author  Mitrade Team
6 Month 10 Day Wed
The United States launched strikes against Iran on Tuesday after a US Apache helicopter was downed over the Strait of Hormuz, breaking the fragile ceasefire previously announced by President Donald Tr
placeholder
WTI steadies around $87.50 despite renewed supply concernsWest Texas Intermediate (WTI) oil price experiences volatility after registering over 2.5% losses in the previous day, trading around $87.40 per barrel during the Asian hours on Wednesday.
Author  Mitrade Team
6 Month 10 Day Wed
West Texas Intermediate (WTI) oil price experiences volatility after registering over 2.5% losses in the previous day, trading around $87.40 per barrel during the Asian hours on Wednesday.
placeholder
Gold Price Analysis (XAU/USD): Gold Falls to 6-Month Low as Inflation Fuels Rate Hike Bets, A Buying Opportunity or a Falling Knife? Gold hit a 6-month low on Fed rate hike bets. However, strong central bank buying and technical indicators suggest potential tactical bounces and long-term accumulation windows.
Author  Mitrade Team
6 Month 12 Day Fri
Gold hit a 6-month low on Fed rate hike bets. However, strong central bank buying and technical indicators suggest potential tactical bounces and long-term accumulation windows.
goTop
quote