The US dollar weakened several times, but it stopped bleeding and rebounded. The latest survey suggested that the wind direction had changed...

SEPTEMBER 7 - Analysts expect the dollar to remain strong this year and weaken in 2024, according to a Reuters poll.

A recent survey revealed that analysts expect the dollar to remain strong this year and weaken in 2024.

A survey of foreign exchange strategists shows that the strength of the dollar will be difficult to conquer before the end of the year, and they see upside risks to the dollar's outlook.

Supported by a strong economy and rising Treasury yields, the dollar has remained resilient against most major currencies, despite several weakens.

The safe-haven dollar hit a six-month high, recouping almost all of its mid-year losses and gaining more than 1 per cent so far this year, as concerns about Asian powers and global growth weighed on risk appetite and expectations that the Federal Reserve would keep interest rates higher for longer.

This strong performance has caused the market to revisit the long-held belief that the dollar will weaken in the short to medium term.

The September 1-6 survey revealed that 43 out of 53 analysts (81%) who answered an additional question saw upside risks to the dollar's outlook.

Jane Foley, head of currency strategy at Rabobank, said: "We think the strength of the dollar will continue and will continue over the next three months."

But according to the median estimate of about 70 foreign exchange strategists, the dollar is expected to weaken modestly against most major currencies over the next year, with most of that coming next year as the Federal Reserve's first rate cut approaches.

"Over the next six to nine months, we expect the Fed to start cutting interest rates, at which point we think the dollar will weaken again," said Lee Hardman, senior FX analyst at MUFG.

The euro has been unable to make any significant progress in the deteriorating economic growth outlook, rising just 0.13% this year and is expected to rise 1.7% to $1.09 in three months, essentially unchanged from the August survey.

The euro is expected to rise 2.7% to $1.10 and 4.6% to $1.12 in six and 12 months, respectively.

The yen has fallen more than 11 per cent against the dollar so far this year, touching Y147 on Wednesday, and is expected to recover all its losses this year and rise to Y132 over the next 12 months.

The pound has risen by nearly 3.5% in 2023 and is expected to rise another 3% a year later to 1.29 pounds per dollar.

Surveys suggest other Asian currencies will face significant headwinds in regaining lost ground this year, with almost all expected to stay within range or move slightly higher against the dollar in the coming months at best.

In Latin America, the Brazilian real and Mexican peso rose about 6% and 12% against the dollar, respectively, and are expected to decline only modestly by the end of the year.

However, the survey found that the Argentine peso has fallen by 50% this year and is likely to depreciate sharply again, falling another 17% by the end of November.