Dollar Set to Remain Strong Despite Yen Intervention

The US dollar is expected to remain strong in the coming months before weakening later this year, according to a Reuters poll of FX strategists.

Nearly all respondents - 95% of about 60 surveyed between July 31 and August 5 - said Japanese yen interventions alone would not sustainably curb its weakness. To make a lasting impact, the Bank of Japan would have to raise interest rates, they agreed.

The dollar has risen 2% so far this year, with the current long-dollar positions expected to be little changed by end-August. The euro is forecast to hold around $1.15 in the next three months before strengthening about 1% to $1.16 by January and to $1.18 in a year.

Federal Reserve interest rate hikes are seen as necessary to contain inflation pressures stemming from the US-Israeli war with Iran, said Kit Juckes, chief FX strategist at Societe Generale.