US Dollar should generally remain well-supported in the first half of 2024 – Wells Fargo
10.11.2023, 14:25

US Dollar should generally remain well-supported in the first half of 2024 – Wells Fargo

After an extended period of US Dollar strength in 2022, it has been a back-and-forth year for Greenback in 2023. Economists at Wells Fargo analyze USD outlook.

Dollar should be a safe place during economic storm

Given an uncertain backdrop as we head into 2024, we believe the US Dollar will remain a safe place to be for at least the next several months. 

We forecast further US Dollar appreciation through at least Q1-2024 and perhaps longer. We expect USD strength could be particularly noticeable against the Euro and British Pound, where sharply slower growth along with central banks that have probably reached the end of their tightening cycles are factors likely to weigh on those currencies. Some Latin American currencies could also come under pressure.

We expect the trend of US Dollar strength will eventually wane and turn to USD weakness later in 2024, as our view remains for a mild US recession, and for the Fed to ease monetary policy by more than expected by financial market participants. That said, the outlook is shifting toward less USD weakness and less foreign currency strength, with the risks tilted toward a softer landing for the US economy and more gradual Fed easing. 

We still believe the Japanese Yen could be an outperformer among the G10 currencies in 2024 as central banks eventually turn to easing. 

The risk and commodity sensitive currencies of Australia, Canada and New Zealand may experience moderate gains during 2024, while the Pound and Euro might continue to underwhelm. 

 

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