The firm argues that the dollar rally during the period of 2021 to 2022 means that there is still scope for a deeper correction to the downside momentum in the greenback moving forward. They don’t expect the dollar to retest the lows seen towards the end of 2020 but says that the currency should move lower as we look towards next year.
They anticipate USD/JPY as being the biggest loser after having been one of the biggest movers amid rising US yields in the last few years.
Societe Generale sees the pair falling back to 140.00 in early 2025. Besides that, they are of the view that EUR/USD could retest its 2022 highs in a push to 1.1400 by Q2 2025.
A word of warning is that one should always take these forecasts with a pinch of salt. They tend to be revised a lot based on more recent market developments. For example, Societe Generale made a forecast back in January here that USD/JPY would fall back under 140.00 in Q2 this year and were targeting the 135.00 mark by year-end. Look at how things turned out instead.
And looking at how things have played out in the last two years, a key lesson is that one should never underestimate the dollar. Sure, it isn’t posting gains in a swashbuckling mood. But when you consider that many in the market were calling for its demise in 2023 and also in 2024, the dollar’s resilience has been rather commendable.