Dollar's Future: No Consensus Among Experts

Experts say the dollar correction is probably over
Citigroup economists think that euro prospects are not that optimistic as some people may think. The European Central Bank will have to proceed with reducing the rates because of negative economic prospects. The reduction will result in increase of the dollar, which in its turn supports positive economic showing of the business climate. Bob Sinche, the head of the Citigroup currency strategy supposes that the euro-to-dollar rate will drop to the ratio of 1.1000 until the end of the year. He thinks that reduction of the rates by the European Central Bank in the 3-4 quarters of the year will reduce attractiveness of the euro; what is more, prospects of the European economy are rather vague which is favorable for the dollar.

UBS analysts think that the levels of 1.1535 and 1.1250 will be the key ones in the near-term outlook. If any of them is achieved this will predetermine development of the situation in the nearest time. On the whole, UBS experts think that economic growth will have little effect upon the dollar increase. UBS's three-month objective for the dollar makes up 1.1800. UBS experts say they are closely watching to catch any opportunity to open USD short-term positions.
 
Deutsche Bank is also skeptical about prospects of the dollar. They say the dollar correction is probably over. "If there are no more stimuli for the dollar increase, we will once again observe the euro-to-dollar rate increase up to the level of 1.20. It is not ruled out that further increase of the rate may follow."
 
 Tom Hobson, the chief technical analyst with Merrill Lynch thinks that currency pairs will further consolidate. As for the euro, he thinks that the level of 1.1400/1.1450 must be surpassed next week. Hobson's forecast for the euro-to-dollar rate within the next 1-3 weeks makes up 1.1215 and 1.1050.

Currency strategists with JP Morgan Chase expect that the euro/dollar pair will consolidate in the nearest time. The forecast of JP Morgan Chase for July makes up 1.1600 and 1.2200 – for December.

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