We retain our view for a moderate-to-soft USD profile as Fed is likely done with tightening for current cycle. But as rates remain high for longer in the interim, any USD dips may be shallow for now especially when a dovish pivot is still yet in sight.

The point of USD inflection would come when market narrative shifts into trading the expectations for ‘more rate cuts in 2024’ and this is highly dependent on how data pans out. A more entrenched disinflation trend and more material easing of labour market tightness, activity data should bring about the shift and for the USD to trade softer. 

For now, USD still retain a significant yield advantage and is a safe haven proxy to some extent. As such, there will still be some room for USD upticks especially if global, China growth momentum stay subdued.