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- USD set to rebound amid heightened geopolitical tensions – ING
USD set to rebound amid heightened geopolitical tensions – ING
The dollar remained offered on Wednesday, although the bearish run is starting to look a bit tired. A quick diplomatic solution in Ukraine is looking less likely now and, when adding the support offered by Fed hikes front-loading, economists at ING think the bearish-USD run has lost most of its steam.
Reduced USD downside risks
“We see an increasingly high probability that the Russia-Ukraine situation will not take any clear direction in the next few days and may morph into a longer diplomatic game – with some degree of diplomatic risk that may linger across asset prices for longer. The dollar could find some support until we get more clarity on this.”
“Markets are proving reluctant to price out a 50bp March hike (which currently has a 50% implied probability). This should continue to offer some support to the dollar in the dips, and 95.50 could again be the floor for DXY in the case of another round of USD selling. Still, we think it is more likely USD will find some stabilisation/support today.”
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