Four reasons why USD's current carry advantage is set to transition into a headwind – BofA
Source Fxstreet
Economists at the Bank of America analyze the potential shift from the US Dollar's (USD) carry advantage to a significant headwind.
Challenging period ahead for the USD
The Fed is predicted to be one of the initial G10 central banks to reduce rates, challenging the USD's carry advantage.
Given the higher starting point of US rates, their potential reduction could significantly narrow the rate differentials with other currencies, diminishing the USD's attractiveness.
The USD stands as one of the most overvalued currencies in the G10, a factor that could amplify its vulnerability in a rate-cutting environment.
Lower interest rates in the US typically boost global risk appetite, a dynamic that historically benefits currencies other than the USD.
Disclaimer: For information purposes only. Past performance is not indicative of future results.
Recommended Articles
Crypto whales are making bold moves heading into May 2025, and three tokens are standing out: Ethereum (ETH), Artificial Superintelligence Alliance (FET), and Onyxcoin (XCN).
US Bitcoin spot exchange-traded funds (ETFs) have seen more inflows this year so far compared to the same point in 2024, according to data.
Litecoin (LTC) price is showing renewed bullish strength after breaking out of an ascending channel pattern, trading above $133 at the time of writing on Wednesday.
The Gold price (XAU/USD) gains momentum to near $3,645 during the early Asian session on Thursday.
Silver price (XAG/USD) gains ground after recovering losses registered in the previous session, trading around $48.40 per troy ounce during the Asian hours on Friday.
Related Instrument
