A Reuters poll shows a growing minority of FX strategists now expect the U.S. dollar's recent strength to persist, even as a majority still forecast a weakening trend. The dollar has rebounded about 4% from May's low, supported by above-target U.S. inflation, a resilient economy, elevated Treasury yields, and expectations that the Federal Reserve could raise rates twice this year. While the median poll forecast sees the euro rising to $1.16 by end-September and $1.18 a year from now, roughly one-third of strategists—23 of 70—predict the euro-dollar pair will remain flat or edge down in three months, up from about 20% in June's survey. Bank of America's Alex Cohen expects three Fed hikes this year and sees additional dollar appreciation at least through the third quarter, while Citibank's Dan Tobon says there is a high chance the euro could fall to $1.11 in coming months. The yen, which hit a 40-year low near 163 per dollar, is forecast to recover gradually to around 154 in a year as the Bank of Japan tightens policy.
Bank of America CorpBank of America's strategist expects three Fed hikes this year, which would benefit the bank's net interest income.
Citigroup Inc.Citibank's strategist sees dollar strength, which could boost trading revenue and net interest income.