Markets are now pricing in approximately 150 bps of rate cuts by the end of 2024. There is a potential for these rate cut expectations to extend further if economic data continues to show a slowdown.

We anticipate fewer rate cuts by other major central banks compared to the Fed, leading to narrowing interest rate differentials between the US and other regions.

We maintain bearish USD forecasts, predicting EUR/USD to rise to 1.15 and 1.18 by the end of 2024 and 2025, respectively. We also forecast USD/JPY to fall to 135 and 130 by the end of 2024 and 2025.