iBanFirst: despite lower inflation, the dollar index may exceed the 115 mark in 2023

According to iBanFirst, in terms of the current economic situation, the dollar index will stay strong. The exchange rate will be in this position for a long time and will probably exceed the mark of 115.

After peaking in September, the U.S. dollar index is depreciating due to lower inflation. This could lead to a slowdown in the Federal Reserve's monetary tightening cycle.

With inflation slowing to 7.1%, the dollar would quickly lose ground against major currencies such as the euro, pound and yen.

According to economists, the currency index is already at its peak in this cycle and will continue to fall toward 100.

However, other experts suppose, that the depreciation is a temporary phase, so the currency price will rise again in case of risks associated with a global recession. This view is shared by iBanFirst analysts.

In absolute terms, inflation continues to be a concern. Michele Sansone, iBanFirst's regional manager in Italy, said that U.S. inflation has already begun to decline from its highest point reached last June. However, the starting point (around 10%) technically leaves the Fed with no choice but to continue tightening monetary policy in the coming months to return to 4%.