Credit Suisse, one of the world’s leading financial institutions, has predicted that the US Dollar Index (USD Index) will test its year-to-date low of 100.82. This prediction comes as the index breaks trend support at 101.90, indicating a potential downward trend for the US dollar.
The USD Index is a measure of the value of the US dollar relative to a basket of six major currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc. It is widely used by traders and investors as a benchmark for the strength or weakness of the US dollar in global markets.
According to Credit Suisse’s analysis, the USD Index has been in a downtrend since March 2020, when it reached a peak of 102.99. Since then, it has been making lower highs and lower lows, indicating a weakening of the US dollar relative to other major currencies.
The recent break of trend support at 101.90 is seen as a significant development by Credit Suisse analysts, as it suggests that the downward trend is likely to continue. They predict that the USD Index will test its year-to-date low of 100.82 in the coming weeks, which would represent a further decline of around 1%.
There are several factors that are contributing to the weakness of the US dollar in global markets. One of the main drivers is the ongoing COVID-19 pandemic, which has led to unprecedented levels of government stimulus and monetary easing around the world. This has reduced demand for the US dollar as a safe-haven currency and increased demand for riskier assets such as stocks and commodities.
Another factor is the uncertainty surrounding the upcoming US presidential election, which is causing investors to be cautious about holding US dollars. The election is expected to be closely contested, with potential implications for US economic policy and global trade relations.
Despite these challenges, there are also some positive factors that could support the US dollar in the coming months. These include the relative strength of the US economy compared to other major economies, as well as the ongoing demand for US Treasuries as a safe-haven asset.
Overall, the outlook for the US dollar remains uncertain, with both positive and negative factors at play. However, Credit Suisse’s prediction of a potential test of the year-to-date low for the USD Index highlights the need for investors to be cautious and closely monitor developments in global markets.
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