USD Index: A bit more pain, but a broader and sustained downtrend appears premature – ING

The Dollar is inching lower again. Some extra near-term USD weakness is possible, but economists at ING suspect we are reaching the bottom of the recent downtrend.

Extra dose of Dollar weakness

“Dollar appears to be lacking any strong support at the moment. While we don’t buy the one-way traffic, and the USD-bearish narrative in the longer run, there may be extra downside room for the greenback this week.”

“We still suspect it is too early to point at China as the key driver for a broader recovery in risk sentiment (and Dollar descent), considering the still sizeable economic challenges affecting China going beyond its Covid policy (e.g. real estate fragility, slowing global demand).”

“For now, we read recent Fedspeak as further indication that a bearish Dollar call on the back of Fed dovish pivot bets still appears premature.”