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FX Strategists at UOB Group slipped the chance that the greenback could have peaked in Q3 2019.

Key Quotes

“The US Dollar finished higher for a second straight year in 2019, against both Majors and Asian peers. A resilient US economy underpinned USD strength across most part of 2019 even as the Fed delivered three insurance rate cuts since July to cushion against trade headwinds.”

“However, in December, the USD started to lose ground as a Phase-One trade deal spurred risk taking and a rebound of most currencies against the USD. As such, the US Dollar Index (DXY) pared gains on the year and finished off its peak in Sep.”

“Heading into 2020, the USD may face intensifying headwinds. We expect US growth to moderate further to 1.5% in 2020 from 2.5% this year, and we also see the Fed delivering its fourth rate cut in 1Q20. Overall, we expect the USD to weaken against most of the Majors this year, including the EUR, AUD, NZD and GBP, eventually targeting 95.6 in DXY by end-2020.”