Fed’s dovish pivot to set the tone for the Dollar to weaken into year-end – UBS

Source Fxstreet

The US Dollar has regained ground in recent weeks after depreciating in late 2023. Economists at UBS analyze the FX market outlook.

Most G10 currency pairings are likely to remain range-bound in the months ahead

Most G10 currency pairings are now back in familiar ranges (e.g., EUR/USD between 1.0500 and 1.1000), where we expect them to remain in the coming months.

Better relative growth in the US than in Europe and a partial reversal of US rate cut expectations should support the Greenback in the near term. However, the Fed’s dovish pivot is likely to limit the extent of any rallies and sets the tone for the Dollar to weaken into year-end.

Our most preferred currency is the Australian Dollar. We also see opportunities for investors to sell near-term upside risks in EUR/USD and GBP/USD, or downside risks in USD/CHF, GBP/CHF, and USD/JPY in exchange for yield pickup.

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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