The FOMC will maintain the “higher for longer” interest rate policy outlook. Therefore, Rabobank economists expect the US dollar to strengthen, driving EUR/USD and USD/CHF to 1.05 and 0.95 three months respectively.
The dollar will continue to be supported this year
Earlier this week, the aggressive tone of testimony from Fed Chairman Powell led to increased market expectations that the Fed could raise interest rates by 50 basis points at its March policy meeting. His tone softened a bit in the second part of his appearance the next day, when he indicated that the discussion about the size of the movement was still in play.”
“Election-wise, we hold the view that policymakers will be forced to keep rates higher for longer to push inflation back to the 2% level.”
“We stand by our view that the USD will remain propped up this year. We see downside risk to EUR/USD 1.05 three months ahead and USD/CHF at 0.95 three months ahead.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
