UBS forecasts further dollar weakening in mid-term

UBS analysts expect the US dollar to weaken in the medium term, with the EUR/USD pair possibly reaching 1.20. The bank adheres to this forecast, even despite the uncertainty about the September rate cut by the US Federal Reserve. Meanwhile, the obscurity regarding the Federal Reserve's decision on monetary policy provides some support to the US currency.

This week, the economic calendar will provide fewer catalysts for a pronounced change in the dollar rate. As UBS notes, this will be a “summer breather” for market participants. The attention of investors and traders in the coming days will be focused on the upcoming meeting of the European Central Bank (ECB).

Flash Purchasing Managers' Index (PMI) data for the eurozone, due out on Thursday, will provide an important insight into broader economic sentiment ahead of the ECB meeting. These indicators will help market participants gauge economic conditions ahead of the European regulator's monetary policy decision.