USD depreciation is set to resume as the global economic recovery gains momentum in the view of economists at CIBC Capital Markets who forecast the US Dollar Index at 88.20 by the end of the second quarter. Key quotes “So far this calendar year, the trade-weighted greenback has been a sleepy story. We expect that to continue in the near-term as the market is still quite short USD. Additional tailwinds could also come from the recent rally in longer-dated Treasury yields, but we expect these to have a marginal effect on the USD given the current pace of the Fed’s QE buying and that the costs to hedge for foreign asset managers are still quite considerable. “What could reawaken the USD bears is the influx of liquidity that’s expected to come as Congress passes the upcoming relief bill. That should increase reserve balances on the Fed’s balance sheet and pressure short-term rates lower by extension. From prior experience, we know that this can materially dent the USD against other currencies.” “Other long-term headwinds to the USD include the Fed’s average-inflation framework, the diversification of foreign flows away from UST, and upcoming talks on digital taxes. While incoming data should be supportive, we expect the Fed to look past this in the near-term and for the USD to continue to trade defensively.” “We’ll need to wait until H2 2022 before we start to see the USD materially outperform against overseas majors on a sustained basis. That’s tied to our view that the Fed will start tightening in 2023.” FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next Silver Price Analysis: XAG/USD seems vulnerable below $26.75-80 confluence breakpoint FX Street 1 year USD depreciation is set to resume as the global economic recovery gains momentum in the view of economists at CIBC Capital Markets who forecast the US Dollar Index at 88.20 by the end of the second quarter. Key quotes “So far this calendar year, the trade-weighted greenback has been a sleepy story. We expect that to continue in the near-term as the market is still quite short USD. Additional tailwinds could also come from the recent rally in longer-dated Treasury yields, but we expect these to have a marginal effect on the USD given the current pace of the Fed’s… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.