Weekly FX forecast: US dollar to extend losses amid mounting confidence crisis?

Following last week’s sharp selloff, the US dollar (USD) may test fresh lows in the coming session as US President Donald Trump’s chaotic trade policy continues to undermine confidence in the global reserve currency. Read our FX forecast for key currencies in the week ahead:

Pound (GBP)

GBP investors will be kept on their toes this week with the publication of the UK’s latest inflation and employment figures. The pound (GBP) may drop if these reinforce expectations for a Bank of England (BoE) interest rate cut next month.

Euro (EUR)

The European Central Bank (ECB) will conclude its latest policy meeting this week, with the bank expected to deliver another interest rate cut. While a rate cut may drag on the euro (EUR), EUR investors may be more interested in how US trade policy uncertainty could shape ECB monetary policy in the coming months.

US dollar (USD)

Looking ahead, the US dollar will likely remain at the mercy of Donald Trump this week. If the US President continues to cast uncertainty over US trade and economic policy, the recent USD selling bias is likely to remain firmly in place.

Australian dollar (AUD)

Australia’s latest jobs report will be a key focus for AUD investors this week. The Australian dollar (AUD) risks slipping if there are further signs that Australia’s labour market is cooling.

South African rand (ZAR)

A weaker US dollar may help to extend the South African rand’s (ZAR) recovery from record lows this week. However, ongoing concerns that South Africa’s coalition government is at risk of collapse may limit the rand’s upside potential.

Canadian dollar (CAD)

The Bank of Canada (BoC) will deliver its latest interest rate decision this week. No policy changes are expected this month, but the Canadian dollar (CAD) may falter if the bank signals more easing may be needed in the future to help counter US trade policy.

New Zealand dollar (NZD)

New Zealand will publish its latest quarterly inflation figures this week. The figures may help to bolster the New Zealand dollar (NZD) if an acceleration of inflation helps to dampen bets for additional rate cuts from the Reserve Bank of New Zealand (RBNZ).

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