This from a UBS note on the US dollar, saying that while there will still be periods that'll see it bounce, these will be for a short duration only and the trend is lower:
The Fed is getting closer to the end of its rate-hiking cycle
- With markets growing comfortable with a terminal fed funds rate close to or at 5%, and US inflation likely to quickly roll over in the first half of this year, downward pressure on the USD should continue to mount.
- Reduced carry advantage could weigh on the Dollar over the medium term. Last year, an increasing US-Germany 10-year interest rate differential was a tailwind for the strong Dollar rally. However, the yield differential is likely to be less supportive this year.
Better growth outlook ex-US supports other currencies.
- We believe that a rebound in global growth expectations for the second half of 2023 and 2024 should support the Euro and the currencies of Asia’s major exporters.
