In the G10 space, we continue to see good upside potential for commodity currencies, in particular, the undervalued Norwegian Krone, Aussie Dollar and New Zealand Dollar.

In emerging markets, the Chinese Yuan should continue to be driven by China-specific factors until US rates move decisively lower and allow USD/CNY to decline sustainably. The upcoming Two Sessions is a key risk event for the Yuan and China-sensitive currencies.

In Latam, the Mexican Peso and Brazilian Real may well prove resilient despite ongoing rate-cutting cycles; while in the CEE region, we expect the paths of the Polish Zloty (strong) and Hungarian Forint (weak) to keep diverging.

The key risks to our bearish Dollar view are a potential USD positive/EM negative re-election of Donald Trump, or – from a purely macro perspective – prolonged resilience in US inflation and consequent further delay in Fed easing.