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Time to fold: BNP Paribas gives up on bullish dollar view

And another dollar dollar bull bites the dust.

French bank BNP Paribas has given up on the idea that the dollar can regain its highs for the year, partly because of a new more cautious stance on the path of interest rates.

In a research note dated Monday, the head of FX strategy for North America Daniel Katzive says he’d thought the buck was ripe for a pullback, but not this year. Now, though…

A combination of reduced expectations for Fed tightening, diminished scope for US fiscal expansion, and an earlier than anticipated move by other G10 central banks towards tighter monetary policy has prompted us to bring forward and accelerate our expectations for the dollar’s retreat.

Among the more eye-catching adjustments, the bank no longer thinks the euro is heading down to $1.04 this year. Try on $1.13 for size. (That’s still below the prevailing spot rate of $1.1650, of course.)

One big reason is that the bank no longer thinks the Fed will raise rates again this year. It also now thinks that with inflation slowing, the Fed will tighten again just three times next year, having previously pencilled in four.

Read more: Dollar still sliding