Dollar Rally Set to Fizzle as FX Strategists Reaffirm Bearish Views

A Reuters poll of nearly 70 FX strategists found that despite the US dollar's recent rally, most forecasters expect it to give up its gains over the coming year. The greenback has surged by more than 3% since early September, with a September Federal Reserve interest-rate hike boosting its strength.

The median views of the poll participants put the euro at $1.14 in a month and $1.15 in both three and six months, before reaching $1.16 in a year. However, Jayati Bharadwaj, head of FX strategy at TD Securities, noted that 'the dollar can remain a little bit on the stronger side in the very near term'.

Many forecasters believe that the Fed's hawkish stance and expectations of continued rate hikes will keep the dollar strong in the short term. Kenneth Broux, head of corporate research for FX and rates at Societe Generale, expects the dollar to slide only once higher rates slow the US economy.