USD rally off the boil - Scotiabank

FXStreet (Guatemala) - Analysts at UOB Group explained that the USD rally has gone off the boil a little in the past day or so as investors mull the apparently imminent Fed tightening cycle and perhaps look back at the USD’s weak performance in response to the more “recent” Fed tightening cycles.

We still think there is upside in the USD as 1) Fed tightening contrasts with likely easing in Europe and 2) the US economy is in solid structural shape.

In the late 1990s, the USD actually weakened because Europe was tightening more quickly than the US while, in the 2004 cycle, the US structural position was significantly weaker.