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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 dollar remains firm at a two-week high, buoyed by anticipation of the Federal Reserve's policy stance. Market sentiment suggests that participants are bracing for a prolonged period of elevated rates, which is likely to support the greenback in the short term. The Fed's decision will be closely scrutinized for any hints on future rate adjustments, especially regarding its forward guidance. As traders position for potential outcomes, volatility in currency pairs like USD/JPY may increase significantly based on the Fed's signal.
Our consensus EUR/USD target sits at 1.075, with Goldman at the upper bound of 1.12 and BofA at the lower end of 1.04. This reflects a divided outlook as we gear up for significant central bank announcements, particularly from the Fed.
JPMorgan’s target aligns closely with the market's current sentiment, sitting at 1.10, suggesting a bullish stance on the dollar against the euro based on potential Fed action. BofA, in contrast, has a more cautious target of 1.04, reflecting skepticism in the sustainability of dollar strength in the near term.
Recent forecasts indicate a potentially impactful session for the dollar depending on how central bank signals diverge. Traders are advised to monitor the implications of the Fed's statements in light of our consensus numbers, as revisions are likely to follow post-announcement.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Traders should watch the Fed meeting closely on the calendar as any hawkish tone may push the dollar higher. Expect potential movement in USD/JPY, particularly around the 150 level, based on guidance from the Fed's statement.
Risks to this view
A more dovish tone from the Fed could quickly undermine the dollar's current strength, particularly if inflation indicators show signs of abating or if economic growth metrics disappoint, prompting a reassessment of the rate outlook.
Sentiment by currency
USD+EUR~JPY~GBP~Composite USD score: +0.65
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