USD: Further gains are likely over the short-term, but unlikely to be sustained – MUFG

After four months of depreciation, the US Dollar rebounded in February. However, weaker USD view still holds, in the opinion of economists at MUFG Bank.

Further USD strength seems likely over the short-term

“Inflation still looks set to fall notably over the coming months and the US labour market is likely to slow.”

“Further US Dollar strength seems likely over the short-term but we have just corrected weaker from over-valued levels and hence we doubt this move will be sustained.”

“Spreads have only marginally moved in favour of the Dollar and remain consistent with USD depreciation.”