The dollar could continue to weaken into year-end after the Fed signaled last week that it was starting to consider cutting interest rates next year, although this period of weakness won’t last long, MUFG said.
With the ECB and the Bank of England remaining reluctant to talk about cutting rates, there is a “window for dollar selling into year-end.” However, the “weak external global growth outlook” remains supportive for the dollar, which should bounce back in the first quarter, MUFG added.