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 US Dollar has proven itself to be a safe haven amid the Ukraine-Russia conflict as investors seek refuge from the uncertainty.
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.
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.
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:
As the tragic Ukraine war continues USD/EUR is near 0.95, a 5 year high.
Due to the Eurozone’s reliance on gas from Russia, the euro is very vulnerable to the events in Ukraine with EUR/USD dropping to around 1.04 in June whereas it had been approaching 1.15 in early February.
Since May the AUD/USD rate has traded in a range between 0.68 and 0.72 as the RBA has acted on a much predicted aggressive increase to interest rates.
However, the AUD’s traditional vulnerability to risk leaves it exposed to a broader correction.
The Ukrainian crisis and the risk on-off market are pushing the Canadian dollar rate up and down in a range around 0.7850 to the US dollar (1 USD = 1.27 CAD).
Volatile oil prices due to the Russian invasion of Ukraine have lead analysts to predict large price movements to continue for the Canadian Dollar.
In June the GBP/USD exchange rate dropped as low as the 1.20 level after the Federal Reserve raised interest rates combined with the continuing impact of the Ukraine war on commodity prices.
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.
From the end of the April and into May the USD/INR exchange rate has risen above the 77₹ 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 132 — 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.