The Future of the US Dollar: A Comprehensive Analysis
As the DXY Index hovers within the 100-107 range, influenced by the Federal Reserve’s commitment to maintaining low interest rates and the robust growth of the US economy, it is crucial for investors to assess the potential trajectory of the US dollar in the coming months.
Factors Driving the US Dollar
- The Fed’s “higher for longer” rates stance
- Exceptional US economic growth
- The impact of US labour market conditions on Fed policy
Predictions for the US Dollar
According to DBS’ FX analyst Philip Wee, there are compelling reasons to anticipate a shift in the value of the US dollar in the near future:
- US growth expected to decelerate to 1.7% by 2025
- Fed projected to cut rates by an additional 200 basis points to reach 3%
- DXY Index forecasted to dip below 100 within the next 12-15 months
Political Considerations
Looking ahead to the next presidential term in 2025, the political landscape will play a significant role in shaping the US dollar’s trajectory:
- Anticipation of a Fed easing cycle rather than rate hikes
- Potential impact of Trump’s protectionist policies on the global economy
- Possibility of a Harris presidency benefiting Emerging Asia’s currencies
Overall, the future of the US dollar remains uncertain, with a combination of economic indicators and political developments influencing its value in the global market.