The Currency Exchange: Acting in unison?

Central banks in developed markets such as Europe, Japan, and the US are responding to inflationary pressure by implementing policy easing measures, resulting in lower interest rates and potential currency weakness. The exchange rate between the euro and dollar is a particular area of focus, as it has been under pressure due to ECB policy and may reach a trough around 105. Attention will be dominated by positioning for the global easing cycle in the coming year, with currencies that performed poorly during tightening cycles likely to be the best performers. Additionally, inflation pressures are expected to impact Switzerland and Sweden, potentially leading to weakness in the Swiss franc and Swedish krona as inflation subsides.