The US Dollar (USD) has recently recovered from its strong gains. Analysts at BBH provide insights into the Greenback’s potential trajectory.

The outlook for US economic growth is positive, which could support a modest uptick in the USD. We anticipate the Federal Reserve won’t implement 75 basis points (bps) in rate cuts this year.

With promising prospects for US economic expansion and highly accommodative financial market conditions, it’s unlikely that the Federal Reserve will opt for significant rate cuts in the near term. Moreover, the February Personal Consumption Expenditures (PCE) deflator is expected to remain elevated, further reducing the likelihood of imminent rate cuts.

Notably, Atlanta Fed President Raphael Bostic, a voting member in 2024, revised his rate cut projections on Friday, indicating a shift to expecting just one rate cut “later in the year” instead of two, citing reduced confidence in the trajectory of US inflation.

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