Gradual USD depreciation later this year, more pronounced weakness in 2024 – Wells Fargo
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Economists at Wells Fargo believe the US Dollar can stabilize through Q1-2023. Longer term, the greenback is set to depreciate.
“The USD should experience a prolonged period of depreciation, as relative growth and monetary policy fundamentals should become less supportive of the greenback over time.”
“US growth resilience and hawkish Fed policy should come to an end by the first half of this year and, with it, an end to USD resilience. Initially, we expect USD depreciation will be gradual later this year as the US falls into recession during the second half of 2023, but the Federal Reserve hesitates from lowering interest rates prematurely.”
“We expect the USD’s depreciation to gather pace in 2024 once the Fed starts cutting interest rates aggressively.”
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