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Analysts at HSBC, point out the US dollar is under pressure, particularly against the euro but they do not expect that momentum to persist.

Key Quotes: 

“The USD is under pressure. The bears, who were slowly coming back out of the woodwork after years of predicting the imminent decline in the USD, are suddenly in the ascendancy. Although the momentum in the USD has moved against our expectations for certain pairs – most notably the EUR and GBP – we do not believe this will persist.”

“When we look at what has fundamentally changed in the last month and would make us reconsider our outlook, we find little reason to turn bearish on the USD. We do not see much that has fundamentally changed outside the price action and a diminishing of near-term European political risk premium.”

“We are still expecting a relatively slow global economic recovery, with downside risks, and, in such a world, we continue to believe currencies with fiscal flexibility are best placed to recover faster than those with more stretched debt dynamics. We still see the AUD and NZD holding on to recent gains and even strengthening further in the next year. But we remain positive on the USD’s outlook against the EUR, GBP and CAD.