FXStreet reports that economists at Westpac discuss US Dollar Index prospects.
“A breakdown in DXY to fresh 2021 appears to be just a matter of time, even as short-term sentiment and positioning metrics suggest the DXY’s slow bleed lower is looking very mature. Vice Chair Clarida and Governor Quarles backed the FOMC minutes’ signal that they will begin a tapering discussion at upcoming meetings if the recovery unfolds as expected. That will throw a lifeline for the DXY, but with substantial progress on the economy unlikely to be achieved until late 2021, sustained taper-driven DXY upside is likely to prove fleeting. Until then, the Fed’s resolutely dovish stance and excess liquidity conditions at the front-end will leave the front-end well contained.”