News & Analysis

If January was the month where markets sobered up following a Christmas holiday blowout, February saw traders take a pause to assess the damage, with G10 FX pairs spending much of the month looking distinctly rangebound. This meant that only one of our two key macro calls for Q1 has played out so far. The unwind of aggressive Fed easing expectations saw the dollar rally, as we thought it would, but February failed to bring with it the divergence in central banks easing expectations that we continue to anticipate. With another round of central bank meetings set to land this month, we think policymakers will have to recognise the growing divergence in economic fundamentals and the consequences for policy rates, although this should be limited to forward guidance as opposed to material changes in policy rates. Nevertheless, this should finally see the second theme of Q1 unfold, with diverging easing bets set to breathe life back into FX markets. This should support further USD appreciation over the coming months, although we think the next leg of the dollar rally will prove more difficult than earlier in the year. Specifically within the G10, we believe CHF, CAD and EUR scan as unsustainably strong and expect a downside correction is imminent as earlier monetary policy easing comes into sight.

You can read our March 2024 FX Forecasts report here:




Simon Harvey, Head of FX Analysis

Nick Rees, FX Market Analyst

María Marcos, FX Market Analyst


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