EURUSD GBPUSD - Will USD Strength Continue?

Even if we still expect the dollar to turn lower by early 2024, USD upside risks remain material in the near term after the Fed surprised with more hawkish dot plots than market pricing. That may look like a reboot of June’s market conditions, but this time, the room for hawkish repricing in US short-term rates (and USD upside) is smaller.

Even if we still expect the dollar to turn lower by early 2024, USD upside risks remain material in the near term after the Fed surprised with more hawkish dot plots than market pricing. That may look like a reboot of June’s market conditions, but this time, the room for hawkish repricing in US short-term rates (and USD upside) is smaller.

USD: End of a strong quarter

This week marks the conclusion of the third quarter. The US dollar has exhibited strength throughout the summer, appreciating against all G10 currencies except the Norwegian krone (NOK). As we assess the near-term outlook, it appears unlikely that this trend will shift. The recent dot plot projections released by the Federal Open Market Committee (FOMC) suggest that the Fed is not yet prepared to signal the end of its tightening measures. Instead, a more aggressive "higher for longer" stance has emerged, with the median 2024 rate forecast now standing at 5.1%.

Back in June, when the Federal Reserve presented more hawkish dot plots compared to market expectations, I highlighted a significant upside risk for the dollar. Unless economic data starts indicating a slowdown, markets would eventually need to align themselves with the FOMC's projections. Although the current situation resembles that of June, the gap between the dot plot and market pricing has narrowed.

At present, markets are pricing in an end-2024 Fed rate of 4.67% (effective rate), implying a 65-basis point reduction from current levels. If the 2023 rate hike, as indicated in the Fed dot plots, is not ultimately realized, the theoretical median 2024 rate projection would decrease to 4.85%. This leaves approximately 20 basis points of potential repricing room should US economic data remain robust.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Regulation: ASIC (Australia), FSCA (South Africa)
read more
USDJPY, GBPUSD, BTCUSD

USDJPY, GBPUSD, BTCUSD

US CPI may offer clues on Fed's next move; USDJPY points up; UK CPI expected to remain steady; GBPUSD tilts down; Bitcoin flies above 123,000; next target at 125,000
XM Group | 1 day ago
Gold Shines as Trade Tensions Rise

Gold Shines as Trade Tensions Rise

On July 14, global markets turned risk-off after President Trump revived tariff threats targeting the EU and Canada. Gold surged past $3,350 on safe-haven bids, while USD/CAD spiked near 1.3700. EUR/USD rebounded toward 1.1700, and NZD/USD slid below 0.6000 ahead of key Chinese trade data. GBP/USD remained pressured around 1.3500 amid Brexit silence.
Moneta Markets | 1 day ago
ATFX Market Outlook 14th July 2025 

ATFX Market Outlook 14th July 2025 

Trump issued a letter late on Thursday that said a 35% tariff rate on all imports from Canada would apply from August 1. Wall Street ended lower on Friday, with Meta Platforms weighing on the S&P 500 after President Donald Trump intensified his tariff offensive against Canada, amplifying the uncertainty swirling around U.S. trade policy.
ATFX | 1 day ago
Dollar Dominates After Trump’s Trade Strike| 11th July, 2025

Dollar Dominates After Trump’s Trade Strike| 11th July, 2025

On July 10, silver extends gains toward $36.50 amid rising macro uncertainty and safe-haven demand. The US Dollar weakens, boosting AUD and NZD. USD/JPY trims early losses as BoJ hike hopes fade, while EUR/JPY retreats from highs on softening sentiment. Markets brace for US Jobless Claims to guide the next leg in global risk and Fed rate expectations.
Moneta Markets | 4 days ago
ATFX Market Outlook 11th July 2025

ATFX Market Outlook 11th July 2025

U.S. stock indices, the S&P 500 and Nasdaq, closed slightly higher on Thursday, both reaching new record closing highs. Optimism was boosted by Delta Air Lines' positive earnings forecast and Nvidia's record-breaking market capitalisation, helping investors remain unfazed by Trump’s latest tariff announcements.
ATFX | 4 days ago