The US dollar has stabilized following yesterday’s sharp correction lower. Economists at ING expect dips to the 112.50/113.00 area in the US Dollar Index (DXY) to attract buyers.

Dollar will continue to be favoured

“We continue to favour defensive strategies in FX – which means backing the dollar and looking for the Swiss franc to outperform in Europe as the Swiss National Bank (SNB) guides it higher.”  

“Out of interest as well, the US trade balance has narrowed back to levels last seen in October 2021 – meaning that the dollar's Achilles Heel – the trade deficit – does not look as vulnerable as it could.” 

“Expect there to remain strong demand for the dollar on dips – e.g in the 112.50/113.00 area for DXY.”