Brown Brothers Harriman (BBH) asserts that the Dollar Index (DXY) is likely to continue trading within its nearly one-year range of 96.00 to 100.00 over the coming months, as markets shift their focus from the International Monetary Fund’s (IMF) more pessimistic global growth forecasts to a recovery narrative [1]. BBH notes that risk sentiment likely bottomed on March 30, suggesting that the worst of the energy shock may be over and that DXY will revert to trading primarily on rate differentials [1].
The report highlights that, despite the presence of numerous central bank speakers on the schedule, no new policy guidance is expected since their last meetings are still recent [1]. This further supports the expectation of a stable trading range for the Dollar Index in the near term [1].
Overall, BBH’s outlook suggests that the market is already discounting negative growth projections and is instead positioning for recovery, which should keep the DXY confined within its established range [1].
CONCLUSION
BBH anticipates that the Dollar Index will remain rangebound between 96.00 and 100.00 as markets focus on recovery and rate differentials. With no new central bank policy guidance expected, market volatility for DXY is likely to remain subdued in the near term.