Over the past year, the greenback has been strengthened mainly due to the divergence in the economic growth of the United States and the rest of the world, as well as trade conflicts, and the monetary tightening of the Fed.
However, the upward trend in the USD index may be questionable when neither the Fed nor the White House is against the weakening of the US currency.
The picture for the dollar is not entirely rosy in the light of the fact that Washington and Beijing can sign an agreement on ending the trade war. The gradual restoration of European and Chinese GDP will make it possible to count on the dispersal of the global economy.
In addition, it is possible that in order to achieve the goal of raising the country's GDP by 3% under the conditions of the "fading" effect of the tax reform and the Fed will have to at least reduce the federal funds rate.
According to HSBC experts, instead of simply reducing the rate, the regulator can launch a new asset purchase program.
In such conditions, the US currency will be forced to weaken.
"The best days for greenback this year seem to be over," experts at Morgan Stanley said.
According to their estimates, the dollar could drop by 6% by the end of the year against the background of a slowdown in the US economy and a softening of the Fed's position.
"We think that the dollar has peaked in the current cycle and may be cheaper than the market expects. The weakening of the "American", in turn, will help reduce the attractiveness of investments in dollar assets, "representatives of the financial institution said.
The material has been provided by InstaForex Company - www.instaforex.com