French asset management giant Amundi believes that the Federal Reserve’s rate hike in September temporarily closes the door to broad dollar weakening.
The asset manager expects a mild US rate-hiking cycle followed by a pause in 2027 and believes that the Fed will ultimately raise rates less than the market is pricing in. This is stated in the latest Cross Asset Investment Strategy Monthly report.
The ECB is also expected to tighten further. Amundi forecasts a total of 50 basis points in additional rate hikes during 2026, followed by one or two cuts from the second or third quarter of 2027 if energy-related inflationary pressure abates.
In the short term, Fed policy supports the dollar. In the medium term, however, Amundi expects renewed dollar weakening, partly due to US public finances, rising interest costs and substantial refinancing needs.
