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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 39 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 39 institutional desks. No promotion.
The recent U.S. CPI data exceeded expectations, prompting a rally in the dollar as markets recalibrated for potential monetary tightening from the Federal Reserve. This shift also lifted Treasury yields, leading to broad weakness in Asian currencies. The implications of sustained dollar strength are significant given the region's export-heavy economies, where any prolonged dollar appreciation can impact trade balances and capital flows.
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). The stronger dollar narrative is reinforced by firms that see a tighter Fed path as increasingly likely.
JPMorgan aligns with the headline's bullish stance on the dollar, targeting 1.10, which reflects their view on increased Fed tightening expectations. BofA, however, has a more conservative target of 1.04, suggesting a bearish outlook against the dollar.
Recent inflation data and the Fed's hawkish signals could lead to upward adjustments in forecasts across the board. For further insights, consider our research on market reactions to U.S. economic data at /research/market-reaction-us-data.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Looking ahead, traders should monitor the 1.10 level for USD support and any changes in the Fed's rate outlook, particularly with upcoming CPI reports scheduled next month. Our consensus continues to reflect a cautious but bullish sentiment for the dollar.
Risks to this view
A potential reversal in this dollar strength could occur if subsequent data indicates an easing of inflation pressures, leading the Fed to signal a pause or reduction in rate hikes. A significant miss on inflation numbers could shift market expectations swiftly.
Sentiment by currency
USD+EUR JPY GBPComposite USD score: +0.75
How we cover this story