Rabobank’s Jane Foley argues that the Dollar is unlikely to follow a straight path of weakness. She expects EUR/USD to trade in choppy ranges in coming months, with geopolitical de-dollarisation pressures not seen as materially impacting USD exchange rates for now.

Dollar seen in choppy, not linear, decline

"Although the consensus favours a move higher in EUR/USD in the months ahead, we remain of the view that the USD is unlikely to be on a straight path to progressive weakness."

"We maintain a forecast that EUR/USD is more likely to trade in choppy ranges in the months ahead as the market digests the implications of a wide array of news."

"Going forward, current positioning should afford the USD some protection to weak US economic data while opening the likelihood of short-covering on better than expected economic outcomes."

"Moves by China and the Eurozone to strengthen the use of their respective currencies by their trading partners will no doubt ensure that de-dollarisation remains topical in the years ahead."

"However, we do not expect this to have a tangible impact on the USD exchange rate in the foreseeable future."

"Even so the liquidity provided by the Treasury market and the USD means that neither can relinquish their dominance easily, nor their safe haven appeal."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)