BENGALURU, Sept 2 (Reuters) - The U.S. dollar will hold firm over coming months but trade weaker in a year, according to a Reuters poll of FX strategists who also broadly said the Federal Reserve would not raise interest rates as much as is currently priced in by markets.
Sparse policy guidance from Fed Chair Kevin Warsh, who gave relatively hawkish remarks last week, has left forecasters little reason to revise long-held calls for the dollar, up about 1.5% year-to-date, to weaken.
The greenback sold off briefly in August after U.S. Treasury Secretary Scott Bessent surprised markets with news of unscheduled long-dated bond purchases. It has recovered in recent days following renewed military conflict between the United States and Iran. .DXY
Interest rate futures are now betting the Fed will hike rates twice this year to tame inflation, last reported at nearly twice the Fed's 2% target.
But currency strategists' forecasts for dollar weakness have barely budged since the August poll. Medians from the August 31 to September 2 poll showed the euro holding its current $1.16-level in three months, $1.17 in six and $1.18 in a year. EUR=
Dan Tobon, head of G10 FX at Citi, said "for me, the most important thing is going to be the repricing for the Fed".
"But if the conflict becomes a bigger factor tomorrow and for the next few months the dollar will go up and we're going to be wrong. That's why there’s such a big divergence — it's really hard to know what the main thing driving markets over the next couple of months is going to be."
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