The dollar downtrend has started to prove unsustainable. In the view of economists at ING, a further USD recovery is likely from current levels as markets show reluctance to fully jump in on bets of a Fed pivot.
Room for further recovery
“It’s hard to see a clear trigger for the reversal in risk sentiment yesterday, and it probably boiled down to markets not being ready to bet heavily on the Fed pivot story.”
“The latter – hawkish – narrative should prevail for the Fed, ultimately capping the recovery in risk assets and offering widespread support to the dollar.”
“We expect a further dollar recovery into the weekend, with upside risks particularly concentrated around tomorrow’s payrolls release, when DXY may extend gains into the 112-113 area.”
Image and article originally from www.fxstreet.com. Read the original article here.