FXStreet reports that economists at HSBC still expect modest USD weakness this year, but the greenback could outperform other currencies over the long run.

“The belief that the global economy is gradually healing should imply that some future degree of monetary policy normalisation will eventually occur, which is then partly discounted by exchange rates today.”

“The Federal Reserve (Fed) is only willing to change to a more hawkish stance if the rise in growth and inflation turns out to be durable rather than transitory. Nevertheless, the volatility in recent activity data and noisy inflation base effects imply that this probably will not become clear until later this year.”

“As long as US fiscal and monetary stimulus is generating spill overs for the rest of the world, such that there is a synchronous global recovery, albeit at somewhat uneven speeds, the broad USD is to weaken modestly.”