Trump's Tweets Could Dictate Dollar's Fate

The fate of the US Dollar is more dependent on Trump, cautious rate cut expectations limit downside room for the US Dollar

Monex Europe analysts have stated in a report that the US dollar has little room to continue its recent decline, given the Federal Reserve's cautious rate cut expectations. The forward rate implies a 1.5 rate cut this year, but considering sticky inflation, the Fed's rate cut may be smaller. A significant devaluation of the dollar would require a "fundamental reassessment of the uniqueness of US growth or a perfect deflationary storm," neither of which is likely to occur in the near term.

However, the likelihood of a significant rebound in the dollar this week is also slim. The Fed's meeting minutes released on Wednesday may appear somewhat outdated, so the dollar's fate will depend more on the unpredictable Trump.