Amid growing expectations that the U.S. Federal Reserve may begin lowering its key interest rate by the end of 2024, Wall Street analysts are forecasting a continued weakening of the U.S. dollar, reports Baltimore Chronicle with reference to Bloomberg.
Experts at JPMorgan Asset Management note that inflationary pressure in the United States is showing gradual stabilization, which paves the way for a softer monetary policy. The firm believes that a rate cut by the Fed will make the dollar less attractive to investors, especially in comparison with the currencies of other developed economies.
Financial strategists at Morgan Stanley also point out that the anticipated weakening of the dollar will benefit emerging markets. As global investors seek higher returns, capital may shift away from dollar-based instruments toward other regional currencies.
According to forecasts from UBS Asset Management, the U.S. economy, while avoiding a recession, is still exhibiting signs of slowing down. This puts additional pressure on the dollar and encourages interest in higher-risk assets in countries with lower debt burdens.
Analysts indicate that renewed confidence in the euro, the Japanese yen, and even currencies of certain Asian countries is linked not only to expectations of Fed policy changes but also to the gradual strengthening of the internal economies of those regions. As a result, shifting sentiment in the currency market could set new trends in global financial flows.
Earlier we wrote that US dollar rises amid stronger-than-expected inflation.