Forex Investment:US Dollar bearish sentiment dominates for the short/medium term
Article Summary:
The dollar is down but not out. I am moderately bearish on the USD for the short and medium term, but I believe the recurrent talk of an imminent end to the dollar’s reign as the main reserve currency is way too premature to be taken seriously. [...]
Article Content:
US Dollar Down but Not Out by UniCredit Group
The dollar is down but not out. I am moderately bearish on the USD for the short and medium term, but I believe the recurrent talk of an imminent end to the dollar’s reign as the main reserve currency is way too premature to be taken seriously. The weakening of the USD over the last several weeks has been broad-based and driven by optimism about the global growth outlook and concern about the US public debt prospects. A trend reversal seems unlikely over the next six to nine months, and EUR-USD will likely rise towards a 1.50-1.55 range. A further moderate USD depreciation would be consistent with the needed rebalancing of global growth, but in no way signals a threat to the dollar’s dominant role in FX markets: There is currently no viable alternative to the USD as main reserve currency. In this context, the recent high-level policy discussions between the US and China are an encouraging sign that converging interests are beginning to foster closer cooperation to ensure a more balanced and sustainable global recovery.
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