Dollar rises in the first quarter

Sources: Bloomberg and Wells Fargo Investment Institute. Daily data from January 1, 2018 to March 31, 2022.

Key Takeaways

  • Wider growth and monetary policy differentials with the U.S. (both likely exacerbated by Russia’s action in Ukraine) should continue to weigh on the euro in the first half of 2022. The euro may struggle to gain significantly until some geopolitical stability returns.
  • The yen may stay weak as Japan is acutely vulnerable to higher fuel prices. The pound may also suffer from stagflationary impacts of higher energy prices and a broader European slowdown.