Leading investment and consumer bank Barclays has predicted what will happen to the US dollar ahead of the Fed meeting. The next Fed meeting is scheduled for Tuesday and Wednesday, and it will evaluate economic indicators in the US. All eyes are on the decision to initiate interest rate cuts and speculation from traders is rife.
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The DXY index, which tracks the performance of the US dollar is now at its lowest at 100.69 on Tuesday. The US dollar remained slippery this month as the jobs data turned out to be lower than expected. However, Barclays has predicted that the US dollar will shed its baggage and rally after the upcoming Fed meeting.
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The consumer bank remains bullish on the US dollar’s prospects giving a new hope for forex traders. Investors avoided taking entry positions in the USD citing volatility ahead of the Fed meeting. The Barclays bullish prediction could change the fortunes of the US dollar after September 18.
Barclays Predict US Dollar Could Rise By 1%
Barclays Bank has predicted that the US dollar could rise by 1% after the Fed meeting on Wednesday. The leading bank forecasted that the DXY index could reach 101.69 by the end of the month. Skylar Montgomery Koning, a foreign exchange strategist at Barclays said to Bloomberg that the Feds could initiate a 25 basis-point cut. The interest rate cut could lead to the USD turning bullish climbing above 101.6, she explained.
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“We expect a stronger-than-consensus number and last month the retail sales numbers were very strong as well,” said the strategist. “You could have the pricing shift more toward a 25 basis-point cut. Most of the time in those soft-lending periods, if you look at the historic ones, the market consistently overestimates the amount of Fed cuts and when you get that turning point in expectations, that’s when you get the dollar rally,” said Barclays strategist on the US dollar.