Absence of an upside surprise to reinforce the Dollar selling momentum – MUFG

After the Dollar rebounded at the end of last week and stabilised on Monday, renewed selling took hold on Tuesday. Economists at MUFG Bank analyze Greenback’s outlook.

Upside surprise in US PCE  required to give the Fed’s push-back attempts a bit more credibility

The US PCE inflation data on Friday remains the key piece of data and really the final key data of the year and an upside surprise is required to give the Fed’s push-back attempts a bit more credibility.

If an upside surprise does not materialise, it will be difficult for the Fed to thwart expectations of a March rate cut which will reinforce the Dollar selling momentum, possibly through the quiet holiday period and into the start of 2024.