FX Market Outlook: USD Still The King

The report maintains a bullish outlook on the USD, driven by US exceptionalism and AI-investment capital inflows. It remains cautious on EUR, GBP, and JPY, while highlighting carry trades and gold as key tactical opportunities.

Key Takeaways

• 1.The USD remains the dominant G10 currency, driven by AI-investment inflows and US growth exceptionalism.
• 2.Geopolitical risks are acting as collateral damage for the EUR, limiting near-term upside.
• 3.Japan is managing political and economic risks associated with a weak JPY, with FX intervention likely to continue.

Table of Contents

• The big picture and FX outlook
• USD: still the K.I.N.G.
• EUR: collateral damage of geopolitical risks
• JPY: intervention against all odds
• GBP: still underweight
• CHF: funding its way amid uncertainties
• AUD: losing its advantage
• CAD: close ties under review
• NZD: bumpy road to recovery
• SEK: growth and its limits
• NOK: still something left in the tank
• XAU: the ultimate safe haven put to the test

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