New analysis shows that the US dollar is likely to still receive good support in 2023, a view that goes against the views of some analysts. These analysts believe that the dollar is at a turning point as the dollar rebounds for months are approaching its end. Supporting this view is the recent consolidation of the euro against the dollar, which fell below parity in mid-July but has rebounded since then and has consolidated between 1.01 and 1.03.
Jane Foley, senior foreign exchange strategist at Rabobank in London, said: "The market will now look for a new direction. To achieve this goal, the strengthening of the US dollar may require another round of new negative news from the euro to supplement it."
Rabobank believes that the following factors may trigger the euro to continue to fall again:
① Europe is facing a severe winter this year
② They believe that the possibility of an economic recession in the euro zone is very high
③ Due to high energy prices, it is a major adverse factor for both businesses and consumers.
④ A cold winter, plus Nord Stream Line 1 Natural gas may be cut off completely
Foley said: "We continue to think that the euro has potential for further downside within 1 to 3 months. Coincidentally, we expect the dollar to be well supported during this period."
Rabobank believes the following factors are favorable to the dollar:
① The Federal Reserve appears to announce a rate hike again on September 21
② The US non-farm report for July released last week showed strong performance
③ The dollar may also find support from safe-haven demand
Foley said that the strengthening of the dollar often has a negative impact on trade.
Another risk facing global economic growth is the slowdown in demand for commodities in Asia. "In our opinion, the US dollar may remain firm until the environment for risky currencies improves. This shows that the US dollar will remain firm until the time enters 2023."
She added: "Although we expect the euro to be a solid support in the 1.01 region, we still believe that the euro to the US dollar is likely to fall below par again within 1 to 3 months."
EUR to the US dollar daily chart
This article is from Huitong.com
