How FX investors exchange currencies

The deployment of US President Donald Trump’s pricing regime attracts the feeling of the dollar and encourages investors to seek their exchange businesses (FX) elsewhere, stratèges at CNBC said.

The dollar index, which measures the value of the greenback against a basket of main competitors, was little changed on Wednesday morning. The American currency began a regular increase at the end of 2024 which culminated in mid -January – however, the dollar index has regularly carried out some of these gains in recent weeks.

The dollar has always been widely considered as an asset of refuge for investors, given its status of currency and domination of global reserve in international loans, payments and trades. When the dollar is strengthening, American exports become more expensive, while imports become cheaper. The value of the greenback can also have an impact on global monetary policy, capital flows and business profits.

“The positioning of currency traders is becoming a drop in the dollar and becomes more optimistic about the currencies of the main American trade partners while the United States is preparing to launch a multinational trade war,” said Joseph Brusuelas, US RSM chief economist, in a research note published on Monday.

Brusuelas underlined the professions of euro as a signal of “erosion of confidence in the dollar”.

“From the end of October to the first week of March, the majority of the euro positioning was long the dollar,” he said in the note on Monday. “But for three weeks now, the net positioning is long from the euro.”

Jordan Rochester, head of FICC’s strategy and executive director of the Emea branch of Mizuho Bank, told CNBC that he had “an increase then” on the Euro against the dollar. He sees the euro falling into a place between $ 1.06 and $ 1.07 before moving to $ 1.12 or more by the end of the year.

“I expect this market to be the price in the” maximum pain “once we know the details of the prices,” he said in an email, arguing that it presented an “opportunity to take the other side”.

“The prices (are) unlikely to worsen once a price and (the EU) and others (are probably) to respond with … the reprisals that will lead to a recovery later,” he said.

Athanasios Vamvakidis, world leader and managing director of G10 FX Strategy at Bank of America, told CNBC that he had seen the descent in advance for the dollar, despite the prices expecting an immediate positive impact on the greenback.

“For the dollar, we have been and we are still lowering for the year as a whole,” he said during a call. “We believe that the market is already selective prices, but it will get prices at all levels.”

He told CNBC that the dollar could rally this week in the immediate consequences of the tariffs in force, but noted that “will probably be an opportunity to sell”.

“Beyond the very short term, there are two channels that should lead to weak dollar,” said Vamvakidis. “First of all, when you have the United States against the rest of the world in a trade war scenario, the United States will eventually suffer because … When you compare it with the rest of the world, the rest of the world is greater. Second, the prices suggest stagflationary risks-and at the moment, the market is very concerned about such risks.”

Like Brusuelas and Rochester, he predicted that the euro would ultimately be stimulated by the Trump trade war. While the United States argued with a mixture of policies that will probably be negative for its currency, Europe focuses on “friendly policies,” said Vamvakidis.

“Germany announcing a massive budgetary stimulus, Europe announcing massive defense expenses, structural reform plans to focus on growth and competitiveness,” he said. “So far, these are plans, but we have not even (had) such plans before, and coming from Germany, the economy with the lowest growth in the euro zone and the greatest economy in the euro zone and the narrowest budget policy in the euro zone, it really changes play.”

Vamvakidis said that his team sees the euro reaching $ 1.15 this year and $ 1.20 in 2026.

The Vamvakidis of the Bank of America also argued the British book The potential to rise as Trump’s pricing regime comes into play, noting that the American president has targeted pricing threats to the EU while referring to what Great Britain could be spared.

“In addition, there is a positive seasonality for the Sterling book in April,” he said. “Thus, in the short term, we should see Sterling fend on relatively well. For the year as a whole, we also like sterling against the dollar. Against the euro, it depends on the implementation of EU reforms.”

In a note at the end of March, Maybank analysts revised their forecasts for the British book upwards, saying that they are now seeing Sterling reaching $ 1.26 by the end of the year before moving to $ 1.31 at the start of 2026. On Wednesday morning, the British currency was over $ 1.29 against the US dollar.

“We … become more optimistic about the GBP with its plans to increase defense spending, maintain budgetary discipline and soften the risks of stagflation,” they said. “We maintain our conviction that the GBP will be more resilient on the grounds that the United Kingdom as a service focused on services is less likely to be influenced by Trump’s trade policies. As an ally close to the United States, it will probably also be spared by the Trump administration.

Maybank analysts also predicted the increase for the New Zealand dollarGiving the currency a target of $ 0.58 against the greenback by the end of 2024 – an increase of 2.1% compared to the current levels.

“A rounded background formed for the NZDUSD which unties more and more,” said Maybank analysts, adding that the prospects for money have remained positive as the economy of New Zealand is recovering and that the pace of monetary easing was likely to slow down.

“Both Australia And New Zealand also has stronger balance sheets than most other Western countries-in particular much lower debt and GDP ratios, “said E-mail Alex King, a former trader and founder of the personal finance platform.

“This means that they have much more margin for the potential stimulation measures their own and (it is) another factor that makes them the two places attractive for investors, which helps to strengthen their currencies.”

He added that the economies of the two countries were “much less linked to the story of the trade war”.

“To fight against the effect of prices, China examines recovery measures to stimulate its own economy and this is considered a positive for the economies of Australia and New Zealand, which both tend to lead trade in China,” King told CNBC.