Dollar bulls gain ground even as most FX strategists still expect weakness: Reuters poll

By Sarupya Ganguly

BENGALURU, July 1 (Reuters) - The U.S. dollar's caller rebound volition slice successful coming months arsenic cooling lipid prices temper ostentation fears and Federal Reserve complaint hike bets, a bulk of FX strategists said successful a Reuters poll, though a sizable number accidental ‌the spot is present to stay.

A little respite from the U.S.-Israeli warfare with Iran helped assistance the greenback astir 4% from May's debased ‌and sent crude lipid prices backmost to pre-war levels portion long-dollar bets climbed to their highest since January 2025, Commodity Futures Trading Commission information showed.

The greenback has besides drawn enactment from U.S. ostentation ​that is good supra target, a resilient economy, elevated Treasury yields and quality successful June astir fractional of Fed policymakers expect rates to emergence this year. Interest complaint futures are pricing successful astir 2 hikes by year-end.

But FX analysts successful the June 26-July 1 survey defied that pricing, sticking to their long-held presumption the dollar volition weaken.

Poll medians showed the euro rising 2% to $1.16 by end-September, $1.17 astatine year-end and $1.18 a twelvemonth from now.

"There's the anticipation the Fed could extremity up cutting involvement rates ‌in 2027, truthful we're much dovish than the marketplace connected ⁠the Fed. Those hikes getting priced retired would measurement against the dollar," said Jane Foley, caput of FX strategy astatine Rabobank, predicting a choppy scope successful coming weeks.

DOLLAR DIVIDE

The organisation of forecasts successful the canvass showed the weaker dollar presumption is ⁠facing absorption from a increasing campy predicting smaller declines - oregon adjacent gains successful the near-term.

A beardown 71% majority, 29 of 41 respondents - who person broadly called it close successful surveys conducted this twelvemonth - said existent net-longs would clasp oregon summation by the extremity of July. The remainder predicted a decline. No 1 expected a reversal to net-short positioning.

About ​one-third ​of strategists successful the survey, 23 of 70, besides forecast euro-dollar to stay level oregon ​even borderline down successful 3 months. That is much than ‌around 20% successful June's survey.

"We precocious revised up our forecast to spot further dollar appreciation astatine slightest until the 3rd quarter," said Bank of America FX strategist Alex Cohen, who expects 3 Fed complaint hikes this year.

"The mode (Fed Chair Kevin) Warsh articulated things connected the ostentation beforehand was a wide bullish-dollar awesome successful our view...and the information supports that. We're looking for a overmuch much hawkish result from the Fed comparative to galore different G10 cardinal banks."

The European Central Bank, aft hiking successful June, is expected to rise rates lone erstwhile much this year.