US dollar (USD) Market Update
According to a recent poll of forex strategists, the US dollar's strength is expected to remain challenging for most major currencies to overcome by the end of this year. Supported by a robust US economy and high Treasury yields, the dollar has proven to be resilient despite concerns over global growth and China impacting risk appetite. This strength is likely to persist into 2024; however, there are expectations of a gradual weakening against major currencies as the Federal Reserve approaches its first interest rate cut. Economists anticipate that the US dollar's strength over the past year will eventually reverse in 2024 as the Fed's interest rate hikes cycle comes to an end.
Looking at recent price data for key USD currency pairs, the USD to EUR exchange rate is currently trading at 0.9201, which is 1.5% below its 3-month average of 0.9337. The range for this exchange rate has been quite stable, fluctuating within a 5.0% range from 0.9101 to 0.9554. Similarly, the USD to GBP exchange rate stands at 0.7918, 2.1% below its 3-month average of 0.8085. This exchange rate has also exhibited stability, trading within a 5.3% range from 0.7861 to 0.8280. Finally, the USD to JPY exchange rate, at 148.2, is slightly below its 3-month average and has maintained a stable range of 4.2% from 145.6 to 151.7.
Overall, the market view suggests that the US dollar's strength is expected to persist in the near term, but a gradual weakening could be seen in the coming years as the Federal Reserve adjusts its monetary policy. This outlook is influenced by factors such as slowing global growth, potential risks to corporate profitability, as well as geopolitical and economic uncertainties.
