The US dollar has made further gains against most major currencies over the past month or so. Interest rate expectations have edged higher in the US and in most places outside Asia, weighing particularly on that region's currencies. While we no longer expect the Fed to cut as aggressively as we previously thought, we still expect bond yields to fall back over the coming quarters and provide a boost to the yen (and most other Asian currencies). Meanwhile, signs that risk sentiment is strengthening beyond US equity markets may provide some relief for risk-sensitive currencies. So, we doubt the greenback will rise much more from here over the course of this year.
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