US Dollar Forecast to Weaken as ECB Rate Hike Expectations Shift to June

Current forecasts suggest a softening US Dollar as the Federal Reserve FED is unlikely to be drawn into a new tightening cycle despite ongoing challenges. In contrast, market expectations are building for an ECB rate hike in June, alongside monetary tightening trends in Australia and Norway. Inflation is projected to rise sharply over the next three to six months, significantly increasing the importance of real interest rates for investors. While markets await upcoming retail sales and PMI data, the focus has shifted toward these diverging central bank paths. The Japanese Yen JPY remains under pressure, and traders are closely monitoring the EUR/USD pair as global monetary policy expectations undergo a structural shift.