Euro and yen still under stronger dollar influence

Sources: Bloomberg and Wells Fargo Investment Institute. Daily data from January 1, 2018 to December 31, 2023.

Key Takeaways

  • The euro may be contained within recent ranges as a forthcoming recession hits the eurozone hard, as we expect, complicating the European Central Bank’s inflation fight and as expectations that the Federal Reserve has finished its rate hiking campaign have put pressure on the U.S. dollar.
  • The yen may have seen its lows as traders will likely respond to intervention on further weakness, but — failing a faster-than-expected policy normalization from the Bank of Japan — it may not see further gains until the U.S. dollar turns lower.