USD Index to head toward the lows at the end of 2020 – SocGen

FXStreet Insights Team FXStreet

The US Dollar Index has not been this weak since April 2022, weeks after the invasion of Ukraine started. Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes Greenback’s outlook.

The Dollar’s discounting the peak in rates again

The market is anticipating the peak in US rates and a further narrowing relative rates. If nothing happens to scupper those expectations (another upside surprise in US growth, or further European growth disappointment) I would expect the Dollar Index to closer but not all the way to the lows at the end of 2020.

That won’t happen in a straight line and will require further interest rate convergence between the US and other major economies, however.

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FXStreet Insights Team

FXStreet

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EUR/USD remains bid, focus stays on 1.1900

EUR/USD has broken its two-day run of losses and is ticking modestly higher on Thursday, hovering around the 1.1880 area as the US Dollar struggles to find clear direction. Weekly Initial Jobless Claims rose more than expected, taking a bit of shine off the Greenback, but markets are largely in wait-and-see mode ahead of Friday’s US CPI release.

GBP/USD sticks to the bid bias, still below 1.3700

GBP/USD is trading with decent gains around 1.3650 on Thursday. Indeed, Cable is attempting to shake off the weakness seen earlier in the week amid another choppy session for the Greenback, while a run of disappointing UK data has so far failed to derail the pair’s tentative recovery.

Gold recedes slightly, trades below $5,100

Gold remains stuck in choppy trade on Thursday, deflating marginally just below the $5,100 mark per troy ounce as the US Dollar drifts without a clear trend. Softer US Treasury yields across the curve are offering some support, but with markets treading carefully ahead of Friday’s US CPI release, conviction remains limited and price action continues to look hesitant.