Reuters Poll: FX Strategists Predict Dollar Rally Unlikely to Last, Though Most Acknowledge Near-Term Upside Surprises
nashnova research
A Reuters poll of nearly 70 FX strategists shows most still expect the dollar to weaken over the medium term — yet roughly 80% concede the greenback is more likely to overshoot their forecasts than undershoot, a tension that may be the most telling signal in the market right now.
What are strategists actually forecasting?
The median call: EUR/USD at 1.14 in one month, 1.15 at three and six months, 1.16 in a year.
This means → the consensus still bets on dollar weakness, but the magnitude is tiny — roughly 3% over a year.
In plain terms = most strategists say "dollar down," but their numbers almost say "barely."
Why has the dollar been so strong lately?
The core driver: Fed Chair Kevin Warsh remains laser-focused on crushing inflation — U.S. inflation has stayed above the Fed's 2% target for over five consecutive years.
Oil prices hold firmly above $100 a barrel, and the U.S.–Iran war is in its eighth month with no ceasefire in sight, compounding inflationary pressure.
This means → high inflation + geopolitical conflict = no room for Fed rate cuts, and elevated rates directly underpin the dollar.
What is the bear case built on?
Jayati Bharadwaj, head of FX strategy at TD Securities, argues the dollar may stay firm in the very near term but remains in a "dollar bear-market regime" over six to twelve months.
She and most respondents expect the Fed's actual rate hikes to fall short of current market pricing.
Kenneth Broux at Société Générale adds that a meaningful dollar decline requires high rates to actually slow U.S. growth — yet Q2 GDP came in at an annualized 2.2%, well above expectations.
In plain terms = the bears are betting "high rates will eventually drag down the economy," but the data isn't cooperating yet.
Why do a few contrarians disagree?
Paul Mackel, head of global FX research at HSBC, is one of the few strategists who correctly called dollar strength this year. He expects the rally to last at least through the first half of 2027.
Mackel argues forecasters carry a chronic bias — assuming the dollar must fall — and rely on valuation models that ignore short-term rates and U.S. economic resilience.
Shahab Jalinoos, head of G10 FX research at UBS, echoes the point: as long as the U.S. keeps attracting capital inflows and equities stay strong, there is "dollar demand that trade-centric models miss."
Why does the 80% number matter most?
The poll shows roughly 80% of respondents believe the dollar is more likely to overshoot their forecast range over the next three months than to undershoot it.
This reflects an uncomfortable reality: over more than two years of monthly polls, strategists have been consistently bearish on the dollar at the 6–12 month horizon — and wrong most of the time.
In plain terms = they won't flip to "dollar up," but they're already admitting "my forecast is probably too low." That split itself may be the single most important signal in the dollar market right now.
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