The US dollar has spent the past two months forming a bullish reversal pattern, signalling a further 4% gain in the DXY index during the months ahead, according to Imre Speizer, Research Analyst at Westpac.
“The background of a likely glacial wind down to the ECB’s asset purchase program along with continued repricing of Fed expectations amid relatively hawkish signaling of late (e.g. Yellen: “my best guess is that these soft (inflation) readings will not persist”) should sustain this USD uptrend near term.”
“Key uncertainties near term include Trump choice for Fed Chair: Powell and Yellen likely to see a mild pullback in the USD and yields while Taylor or Warsh should see US yields and the USD extend recent gains.”
“The event calendar highlight this week is advance Q3 GDP (27/10); surveys include the Richmond and Kansas PMIs and Michigan sentiment. The Fed enters their Nov 1 pre meeting blackout.”
“3 months ahead: Beyond a near term stumble, the USD remains in good shape. Accommodative financial conditions point to yet more upside surprises in coming months while yield spreads should gravitate in the USD’s favour as the Fed Funds rate extends its glacial ascent above other countries’ key cash rates and as the Fed’s balance sheet shrinks relative to the ECB and the BoJ’s balance sheets.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.