The USD is in the early stages of a significant, structural decline. The decline may not be linear.

The recent weakness in the USD is likely a result of diminished recession risks, reflected in resilient activity data and ongoing disinflation. The People's Bank of China (PBoC) is increasingly guiding for a stronger CNY, and the risks of the Bank of Japan (BoJ) widening its Yield Curve Control (YCC) are escalating, both of which weigh on the USD/JPY. We believe there is scope for these moves to continue. 

We forecast that EUR/USD will rise to 1.18 and USD/JPY will fall to 123 by the end of 2024.