UBS Wealth Management, Singapore FX analyst Tan Teck Leng spoke to Bloomberg TV earlier
Tan says that the US current account deficit and worsening fiscal shortfall will be the key factors in weighing down the dollar over the longer-term.
However, he says that "if the Fed would sound a bit more hawkish, that could spur some profit-taking on short dollar positions". Adding that Fed chair Powell may "swing" to four rate hikes this year on the basis of an improving economy, followed by three rate hikes next year.
Meanwhile, Tan also commented that he sees the Japanese yen being the best trade among the G-10 currencies this year. He says "USD/JPY is really an interesting currency pair" because of Japan's narrow current account deficit and signs that inflation is picking up.
Hmm, while I agree that the yen has been an interesting/attractive currency pair this year, I'm not too sure about Japanese inflation actually showing signs of picking up - or at least to get to levels enough to warrant the BOJ to potentially discuss exiting easing policy.
Here's a snapshot of the major currency bloc performance against the dollar so far this year:
