Economists at BNP Paribas Research revise their targets on EUR/USD and USD/JPY as they expect the Dollar to embark on a bearish trend.

A multi-year bearish trend in the USD is underway

“We expect USD strength to ultimately prove short-lived. Indeed, we believe a multi-year bearish trend in the USD is underway, with portfolio flows turning increasingly negative for the currency.”

“Yields turning positive in Europe and Japan could spur repatriation by local investors; we note they have accumulated significant US fixed income exposure since 2014. With evidence of these repatriation flows appearing, we revise our USD forecasts lower and now project EUR/USD to rise to 1.14 by end-2023 and USD/JPY to decline to 121.”