U.S. dollar strength has not run its course just yet, despite recent weakness say economists at Capital Economics. They add that they are expecting the euro to fall to parity against the U.S. dollar by the end of the third quarter. Looking at the U.S. dollar’s current correction, they say “we expect this to be a temporary pause rather than a permanent reversal in the rise of the U.S. currency.” They say that monetary policy differentials between the Federal Reserve and the European Central Bank will continue to dominate the marketplace, supporting the greenback.
