US Dollar Weakness Has Further to Run
Aon expects that the US dollar will remain under pressure from lower real interest rates, global growth recovery later this year, and the US twin deficits.
The US dollar fell against a broad range of currencies in 2020 and appears to have broken down below its 12-year uptrend. This weakness has been in line with our expectations. We expect that the US dollar will remain under pressure from lower real interest rates, global growth recovery later this year, and the US twin deficits. However, the US dollar is currently oversold, which may stall further weakness in the near-term. Other risks to the weak dollar story include higher bond yields without much inflation and Eurozone hazards. Overall, it looks to us that the dollar is still likely to weaken further over the medium-term, although the move could be less pronounced than in 2020.
To learn more, continue reading the article above.