US Dollar to stay dominant, but big Fed push needed to climb higher – Reuters poll

“The US dollar will reign supreme for at least another 3-6 months,” per Reuters’ latest poll conducted between January 31 to February 02. The survey results also mention that it will take a significant change in market expectations for Federal Reserve rate hikes to push it higher.

Additional quotes

Asked how many additional basis points of Fed tightening need to be priced in for this year for the dollar to trade significantly higher, 24 analysts returned a median of 62.5 basis points. That was on top of the roughly 125 basis points currently priced in for the year.

Federal funds futures imply U.S. interest rates will peak at just 1.75%-2.0% in the current cycle. That was lower than the 2.25%-2.50% economists predicted in a separate Reuters poll last month.

The euro was forecast to erase some of its losses for the year and gain over 1.5% over the next 12 months. Those gains would still fall short of recouping an almost 7% loss against the dollar last year.

The Japanese yen, which has benefited from the flare-up in geopolitical tensions and the ensuing flight to safety, was up 0.75% for the year but was expected to give up those gains and drift down 1.5% in a year.

Read: Forex Today: Dollar retains the weak stance ahead of BOE, ECB