The US dollar has continued to strengthen during the Asian trading session. In the view of economists at MUFG Bank, the case for a stronger USD remains compelling.

The developments continue to favour further USD strength in the near term

“Fears over a sharper slowdown in global growth have been reinforcing the relative safe-haven appeal for the US dollar helping to lift it to multidecade highs alongside the appeal of higher US rates as the Fed sticks to plans to speed up rate hikes to combat upside inflation risks.”

“Even recent evidence of a pick-up in economic activity in China has failed to ease global growth concerns and dampen the allure of a stronger US dollar.”

“The main near-term risk to our bullish US dollar view would be the release of a much weaker than expected US CPI report tomorrow.”