85% of Market Analysts See Strong Dollar in April - Reuters Poll

The majority of currency analysts believe the dollar will remain strong in April, according to the latest poll conducted by Reuters. As many as 48 surveyed market analysts, out of 56, see the current dollar strength remaining for at least a month.

About 20% of the surveyed analysts say the dollar will remain strong 3-6 months while 28.5% say the strength is here to stay for more than six months.

“We started the year dollar negative both in the short-term and in the long-term but the shift in the environment is so dramatic that staying dollar negative in the short-term was very risky,” said Steve Englander, head of G10 FX research at Standard Chartered.

The dollar is trading about 3.5% higher this year, contrary to predictions from the start of the year. Unprecedented stimulus packages unveiled by the US Government pushed analysts towards having a negative 2021 outlook for the greenback.

In the mid-term, analysts are still bearish on the dollar. In another FX poll from the last week, the currency analysts predict a weaker dollar over the next 12 months.

“I don’t think we’re going to have a massive run-up on the dollar in the way we did a couple of years ago. I think we can go a little bit further,” said Jane Foley, head of FX strategy at Rabobank.

One of the main reasons behind a surging dollar this year is an apparent weakness in the euro. Investors’ concerns over the slow vaccine rollout in the EU are hurting the euro.

“My forecasts are for the euro to go back up to $1.21 on a three to six month view, but I’m not feeling comfortable with that. I’m beginning to think I’m going to have to bring that lower over the next couple of weeks or so,” added Rabobank’s Foley.

About 60% of analysts aren’t in favor of investing in emerging markets currencies as they see this group of currencies underperforming in the next three to six months.

“In the very near-term the environment has become a lot more challenging... We wouldn’t be going to buy emerging market currencies right now,” said Lee Hardman, senior currency analyst at MUFG.

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