Deutsche Bank predicts a sharp strengthening of the dollar in 2024

According to an analysis published by Business Insider, the US dollar is predicted to strengthen significantly this year. This expectation is due to the slow change in the monetary policy of the US Federal Reserve System and the uncertainty associated with the upcoming US presidential elections.

Analysts from Deutsche Bank predict that by the beginning of 2024, the dollar exchange rate against the euro may reach $1.05, and the yen exchange rate – 150 per $1. The reason for this strengthening of the dollar is the belated «dovish» reversal in the Fed's policy.

This means that rates will be kept at a high level for longer than in other G10 countries, where a reversal in monetary policy will occur earlier due to a combination of economic growth and inflation. As a result, the US Federal Reserve may become the softest central bank over the next two years.

Interestingly, according to analysts, even a Fed rate cut will not lead to an instant weakening of the dollar, since in previous cycles of monetary policy easing, the dollar has most often strengthened. A weakening of the dollar is possible only if the US economy enters a recession, which at the moment seems unlikely.

In addition, the support of the dollar is influenced by global uncertainty caused by the crisis in the Middle East and the uncertainty of the outcome of the US presidential election.