USD/XPF Outlook:
Bearish, as the USD trades below its recent average and near recent lows due to weakening investor confidence.
Key drivers:
• Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with ongoing dollar sell-offs, impacting the USD negatively.
• Risk/commodities: The recent decline in global risk appetite has put downward pressure on the USD, while the XPF remains stable.
• One macro factor: The geopolitical tensions regarding U.S. trade policies have further strained the dollar's position in the forex market.
Range:
Expect the USD/XPF to hold within its recent range, potentially testing the lower end as pressures continue.
What could change it:
• Upside risk: Positive economic data from the U.S., particularly in the labor market, could help strengthen the USD.
• Downside risk: Continued negative news related to geopolitical tensions may drive the USD lower and further support the XPF.
