LIVE MARKETS-The dollar can hold its ground until summer 2025 - SG

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THE DOLLAR CAN HOLD ITS GROUND UNTIL SUMMER 2025 - SG

One of the hot topics in 2025 is when the U.S. dollar's dominance might wane, following its performance in 2024, including during and after the U.S. elections.

According to Societe Generale, "dollar bears probably ought to hibernate until next summer."

"Our (U.S.) rates forecasts suggest we will trade in a $1.03-1.06 range in the first half of next year, and then edge above $1.10 in the second half," says Kit Juckes, forex strategist at Societe Generale, who sees 2-year U.S. Treasury yields as the primary driver of currency trends.

"Spring shoots of life in the European economy, signs of fatigue in this incredible U.S. cycle and clarity on the policies of President Trump may all help (the euro) in the by summertime, patience is required through the winter and spring."

The yen hovered near a five-month low on Friday as traders chewed over contrasting messaging from a hawkish U.S. Federal Reserve and a cautious Bank of Japan.

However, "the prospect of a Bank of Japan rate hike in the first quarter and a drift lower in Treasury yields in the second half of 2025 suggest the USD/JPY fair value is peaking around now and will be in the mid-130s by the end of next year."

"We don’t expect to see a test, let alone a break of the July USD/JPY peak above 160," Juckes argues.

(Stefano Rebaudo)

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