The US dollar is on the back foot. While the most recent point of pressure comes from Trump’s revelation of sensitive information to the Russians (Sending EUR/USD above 1.10), there are other reasons to be doubtful. What’s next?
Here is their view, courtesy of eFXnews:
BTMU FX Strategy Research notes that the USD has been weakening as of late on a number of key factors.
“In terms of our key FX Themes for 2017, we believe the key themes are now all working together against the US dollar,” BTMU notes.
In particular, BTMU outlines the following 3 USD bearish factors: 1- The European political risk premium has shrunk after the election result in France. 2- Trump reflation optimism has been easing. 3- Central banks outside of the US have slowly started to shift their guidance suggesting other central banks will soon follow the Fed’s lead in removing monetary accommodation.
What’s next? Further USD Depreciation ahead:
BTMU maintains its more bearish than market consensus view for the USD with expecting a near 4.0% drop in the DXY index through to end Q1 2018.
“We doubt Fed rate hikes will provide much support for the dollar given the shifting stance from other central banks will prove more significant in limiting the scope for any shift in yield spreads in favour of the dollar,” BTMU argues.
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