USD Could be Oversold - Rabobank
According to analysts from Rabobank, the USD direction in the near-term
depends on the signals coming from the Federal Reserve. They note that
the Fed is still the most hawkish G10 central bank and that the USD
might be oversold.
Key Quotes:
“The Fed
may set the tone for the USD… but other central banks will also
influence. On a relative basis the Fed is still the most hawkish G10
central bank and this implies the USD may be oversold.”
“The
DXY dollar index has limped almost 1% higher from its April low led by a
modestly softer tone in both the EUR and the JPY. Whether or not the
greenback can climb further near-term very much depends on the signals
provided by the Fed’s statement this week regarding the likelihood of a
June interest rate hike.”
“The policy signals supplied by other
central banks such as the BoJ on April 28 are also likely to have an
important impact on the dollar index going forward.”
“Consistent
with our forecasts for a stronger USD vs. both the EUR and the JPY we
expect the DXY to end the year close to the 98.0 area.”
“However,
it remains the case that on a relative basis the Fed is far more likely
to hike rates than most other central banks this year and this factor
suggests that the USD could be oversold vs. a range of other
currencies.”
