News & analysis

The FX rollercoaster ride continued in June as traders attempted to balance the risk of higher inflation and central bank policy rates against growing recession fears in major economies like the US, the eurozone, and the UK. Ultimately, the mixture of tighter global financial conditions and lower growth expectations prompted inflows into the US dollar, with the DXY peaking mid-month as the Fed pivoted to hike rates by a larger 75 basis points. While we anticipated in our June projections that hawkish messaging from Fed officials was set to continue, the increase in the pace of tightening and the higher projected terminal rate relative to our expectations resulted in a stronger dollar than we had forecast. In response to developments over the past month, we continue to think that the US dollar is ripe for a downward adjustment, but we now expect this to occur in late Q3 following the Fed’s September meeting, with downside risks for the dollar more prevalent in the fourth quarter.

You can read our July 2022 FX Forecasts report here:



Simon Harvey, Head of FX Analysis
Jay Zhao-Murray, FX Market Analyst


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