Forecasts for the US dollar change all the time, affected by news events and relative sentiment towards the US economy. This continually updated article reviews the latest forecasts from banks and FX experts as well as news and recent movements of USD in the currency markets.
What’s in this US dollar forecast summary?
The strength of the US dollar looks likely to continue when, at the annual Jackson Hole central banker’s getaway, Reserve Chair Jerome Powell said that the US central bank will ‘keep at it’ and is likely to keep raising interest rates to battle surging inflation.
A clear reflection of this is that the US Dollar index (measure of the USD strength against basket of currencies) is approaching 20 year highs.
16 Sep 2022
02 Jul 2022
30 Sep 2021
01 Oct 2017
02 Oct 2012
05 Oct 2002
You can also read our full Foreign Exchange Guide to the United states.
The market’s expectation for a rise in US inflation and thus interest rates has pushed up the USD exchange rate against most currencies.
The US Dollar has also proven itself to be a safe haven amid the Ukraine-Russia conflict as investors seek refuge from the uncertainty.
So what will the dollar do for an encore after it posted its biggest annual gain in six years? America’s high rate of inflation likely means ‘Dollar bulls’ (stronger dollar) are likely to remain in charge at least until U.S. inflation shows clear signs of peaking.
The US dollar is the most popular reserve currency so whether the USD rises or falls in the future is a difficult question and the answer depends on many factors.
A good way to consider the US dollar’s current relative value is to look at the recent US Dollar Index which measures the USD value against a range of peer currencies.
The following sections show a summary of trends and forecasts for popular US dollar exchange cross rates:
The European Central Bank surprised markets mid July when it increased interest rates by 50 basis points, the first rise in over a decade.
Due to the Eurozone’s reliance on gas from Russia, the euro remains vulnerable with USD/EUR at a 20-year High at parity in August, whereas it had been 0.87 in early February before the start of Putin’s so called Russian ‘special miliary operation’ in Ukraine.
As predicted, the AUD’s traditional vulnerability to risk has left it exposed to a broader correction in late September.
CBA have lowered their forecast for the Aussie to fall to US62¢ by December as the slow down in the Chinese economy hits the price of many of Australia’s key commodity exports.
Volatile oil prices due to the Russian invasion of Ukraine have lead to large price movements to continue for the Canadian Dollar.
Towards the end of September the loonie has weakened sharply down to around 0.73 relative to the greenback (1 USD = 1.37 CAD).
GBPUSD is down over 20 percent this year and hit an all-time low (since decimalisation in 1971) in late September of 1.03 (1 USD = 0.97 GBP) — reacting to the controversial tax-cutting policies from the new chancellor.
The Bank of England has joined the global fight against inflation, but has raised rates by less than the US Federal Reserve.
So it seems the BoE’s gloomy economic forecasts has increased pressure on Sterling.
Mid-year the peso has weakened back above the key 20 level versus the US dollar.
When uncertainty increases, traders tend to move quickly out of emerging market FX such as the peso first before looking for safe havens.
Since the beginning of the war in Ukraine the USD/INR exchange rate has steadily risen to above the 79₹ level, well up from around 72₹ mid last year.
The Ukrainian crisis and its risks for energy supplies have pushed the dollar up against the rupee as India imports most of its oil requirements.
The Japanese yen continues to lose ground against the US dollar. For reference, with USD/JPY hitting 136 in July — a more than 20-Year Low for the yen.
Yen weakness against the greenback stems from the interest rate differentials between Japan and the US. The market expects that the Fed Reserve will continue to hike rates aggressively, while the BOJ is committed to low interest rates.
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.