FXStreet (Delhi) – Research Team at MUFG, sees prospects for further dollar strength next year and are forecasting lower EUR/USD levels throughout next year. Key Quotes “However, we do anticipate much less general dollar strength than over the last two years. Crucial to the view that the dollar will advance further over the first half of the year and possibly into Q3 is that the FOMC will raise the federal funds rate at least three more times, at each press conference meeting through to September.” “We feel it is certainly reasonable at this stage to assume the US economy will perform well enough for the federal funds range to reach 1.00%-1.25% by the September FOMC. A reassessment of speed in 2015 is surely likely to be quicker rather than slower given just two rate increases are priced for next year. The updated FOMC projections for the median federal funds rate, maintained the previous total of four rate increases for next year, despite the modest lowering of the core PCE inflation forecast underlining the strong view of what will be required next year if the US economy maintains its current growth rate of around 2.0%.” “Only a negative view on the near-term prospects for the US economy can justify such a view on rates and the US dollar. We only see prospects for continued economic expansion similar to the current pace. The unemployment rate will continue to fall and inflation and wage rises will become more apparent. While 2016 may see some deceleration in the pace of jobs growth given the scale of growth in recent years, the crucial data is more likely to be on the inflation side given the FOMC signal that it is now monitoring closely “actual” as well as expected inflation.” “Finally from the euro side of the EUR/USD view, if the US economy remains on an expansionary track and broader financial market conditions do not become disorderly, we expect portfolio capital outflows to re-emerge from the euro-zone.” For more information, read our latest forex news.