As countries face inflation, labor market and other economic data as well as monetary policy adjustments, major investment banks have also forecast the outlook for each currency in the second half of 2023.

Cicc believes that after entering the second half of the year, with the end of the Federal Reserve tightening cycle, the European and American economies may gradually begin to show some initial signs of recovery, and the panic in the financial market will begin to calm down. When the global economy initially stabilizes, the trading center of gravity of the market may shift from recession to recovery, and the dollar will also start a downward trend cycle. The point at which the strength of the dollar changes may occur is a few months after the end of the Fed's interest rate hike cycle, and the year-end dollar index level is judged to be about 100.

In terms of RMB, CICC believes that in the second half of the year or return to the appreciation track, the center of the RMB exchange rate of US dollar in the fourth quarter of 2023 or around 6.70.

With the official start of the downward trend of the US dollar in the second half of the year, the euro is expected to recover against the US dollar at the end of the year, rising to a trading range of around 1.06-1.10.

In terms of the yen, CICC believes that the center of the USDJPY exchange rate in the fourth quarter of 2023 May be around 125.

In terms of the pound, CICC believes that in the second half of the year, with the downtrend of the US dollar officially opened, the pound is expected to recover against the US dollar at the end of the year, rising slightly to around 1.24.

In terms of the Canadian dollar, the Chinese Canadian dollar is expected to recover against the US dollar by the end of the year, rising slightly to around 1.33.

The following is CICC's specific forecast for each major currency pair at each stage:

Morgan Stanley expects the dollar to weaken more against the euro this year as fears about the severity of the recession begin to ease. Morgan Stanley expects the euro to strengthen to 1.15 against the dollar by the end of the year and the renminbi to reach 6.65 by the end of the year.

Francesco Pesole, currency strategist at ING, thinks the dollar will fall in several quarters. Pesole said: "With the US deflation story developing and the Fed cutting rates by 100 basis points in the fourth quarter of 2023 to ease the front-load, most of the dollar's decline is likely to occur in 2H23." This could lead to the euro reaching 1.20 against the dollar by the end of the year."

Goldman Sachs analysts Michael Cahill and Lexi Kanter believe credit conditions in the United States have not tightened as much as initially feared, while activity in Europe and China has confounded strong expectations earlier this year. "There may be more room for dollar strength in the near term than the market is pricing in, and ultimately, we think total dollar depreciation this year is more limited than generally believed." They said there are not enough factors to guarantee continued euro appreciation and that the policy paths of the Fed and Europe are not that different, maintaining their forecast of 1.10 against the dollar by the end of 2023. In contrast, Goldman Sachs is more bullish on sterling and tends to short EUR/GBP with a target of 0.86 and a stop loss of 0.88.

MUFG expects lower energy prices to support the outlook for the UK and eurozone. MUFG believes that the improved terms of trade in energy have helped the UK economy to regain vitality, which will help to provide support and improve the UK's trade and fiscal position, which will further help to provide support for the pound. In this context, its forecast for GBP/EUR by the end of 2023 is 1.14.

Danske Bank expects that the Federal Reserve is not expected to cut interest rates, and tighter financial conditions will support the dollar. The Fed's stance and tighter financial conditions will weaken the pound, with the 6-month GBP/USD forecast at 1.20 and the 12-month forecast at 1.17. Due to similar fundamentals, GBP/EUR will trade in the 1.14-1.15 range most of the time.

ING expects the economy to deteriorate further in the second half of the year, which will force the Federal Reserve to cut interest rates more aggressively, with 100 basis points expected by the end of 2023. According to ING's overall view on the dollar, GBP/USD should move higher this year, with a year-end target of 1.33.

The current consensus among market traders is that there is about an 83% chance that the Fed will not raise rates in June. But as for future action, Fed officials have so far been unanimous in predicting no rate cuts this year.