The American Dollar will likely remain bid for more than six months and the EUR/USD pair will rise 4% to 1.17 in the next 12 months, as opposed to the previous forecast of 1.18, according to latest Reuters poll.
Key points
The Fed may refrain from signaling an easing bias if the US economic data continues to hold up over the summer, helping the Dollar stay bid across the board.
With expectations that the Fed may need to deliver rate cuts over the next six to 12 months, the yield spreads are beginning to move against the US Dollar. A sustained narrowing of yield differentials will dent Dollar’s appeal.
The USD will be treated as a safe haven asset as the Japanese yen does not offer any yield.
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