The greenback has already embarked on a prolonged period of depreciation that could last into 2024, warn analysts at Wells Fargo. They point out that the relative economic growth performance, and monetary policy outlook have turned less supportive of the US dollar.
No longer forecasting USD strength early this year
“The U.S. dollar has embarked upon a prolonged period of depreciation. Relative growth and monetary policy fundamentals have become less supportive of the greenback. We expect U.S. dollar depreciation to be gradual in early 2023 as the U.S. falls into recession during the second half of this year, but the Federal Reserve hesitates from lowering interest rates prematurely.”
“We expect the U.S. dollar's depreciation to gather pace in 2024 since, even as the U.S. economy begins stabilizing, we believe the Fed will start cutting interest rates quite aggressively starting early next year. From current levels, we forecast the Fed's trade-weighted dollar index versus advanced foreign economies to soften 3% by the end of 2023, and by a cumulative 8.5% by the end of 2024.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.