By Bilal Hafeez 05-01-2021
In: hive-exclusives | FX Investment Strategy

Is There A Strong Consensus For Dollar Weakness In 2021?

(1 min read)
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With the dollar weakening in recent months, it is useful to know whether investors have become excessively bearish on the currency. One way to check is to see whether currency analysts are forecasting dollar weakness for the year. Specifically, we can look at the average of end-2021 FX forecasts across currency analysts and compare this to FX forwards to find which currencies are expecting to appreciate the most.

Perhaps the most surprising outcome is that analysts are neutral on the euro – they do not expect EUR/USD to move much higher than forwards. The end-2021 forecast is 1.24, which is where forwards are. The same can be said for the pound, where GBP/USD is expected to end the year around 1.36, and USD/JPY, which is forecast at 103 – both are around FX forwards. Therefore, it is clear that analysts are not bearish on the dollar. On the contrary, most expect a range-bound year for the majors.

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