USD could find support on the back of haven demand even if US economy is headed for a slowdown – Rabobank

The downside for the USD in the scenario of weakening activity data for the US economy is set to be limited by declining risk appetite amid concerns around global growth, economists at Rabobank report.

USD strength could remain in play into 2024

The US is still likely to experience technical recession early next year as monetary tightening increasingly takes effect. 

Understandably, many commentators are of the view that slowdown risks threaten to take the shine off the outlook for the USD. However, this assumes that investors see more opportunity elsewhere. It is our view that the Eurozone will suffer technical recession in H2 this year and that the region will only be able to muster very soft growth in 2024. China is also experiencing a slowdown in growth. 

Even if the US economy is headed for a slowdown, the USD could find support on the back of haven demand given broad-based concerns over weak global growth.