The US Dollar weakened further and more substantially in November. After a period of swings back and forth between renewed USD strength and weakness, only later in 2023, we will see a sustained turn weaker for the Dollar, according to economists at MUFG Bank.

A period of some rebound for the Dollar seems likely

“We do not yet see grounds for a sustained weakening of the USD and expect the coming three-to-four months to be a period of swings back and forth as the fundamental driver of Dollar strength becomes less compelling but equally broader financial conditions remain challenging for a sustained retracement of Dollar strength.” 

“QT is ongoing, global dollar liquidity is shrinking and equity valuations remain stretched, all USD supportive factors.”

“A peak for the US Dollar may have passed but we would expect swings back and forth between renewed dollar strength and weakness and only later in 2023 will we see a sustained turn weaker for the Dollar.”