Dollar's renewed strength temporary, weakness ahead: FX analysts
BENGALURU : Unfazed by the dollar's recent strength, analysts polled by Reuters predict a weaker greenback in a year amid an improving global economy and expectations the U.S. Federal Reserve will stop hiking interest rates well ahead of the European Central Bank.
"You've had this recent hawkish repricing of Fed rate hike expectations ... which obviously helped the dollar to rebound in February. So we can certainly see that being sustained in the very short term," said Lee Hardman, a currency economist at MUFG. While analysts have been predicting a weaker dollar 12 months out for over five years, their predictions only came true in 2020 when the currency weakened more than 6.5 per cent.
While 11 of 39 expected a decrease in short positions, 10 said they would be around the same. Among the remaining 18, a dozen forecast a reversal to net long positions and six predicted an increase in net short positions. Even the British pound, which dropped more than 10 per cent last year, was expected to claw back around half of those losses in 12 months.
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