Currency strategists say the U.S. dollar is more likely to consolidate than collapse in the months ahead, even as markets look toward Federal Reserve rate cuts.
Rabobank:
- argued the dollar’s scope to fall is limited in the near term, with easing already priced in and positioning skewed toward further weakness
- earlier in the year, non-U.S. asset managers sought protection against dollar downside, adding to pressure on the currency. But if much of that adjustment has already been made, one of the key headwinds should fade
- expects any further dollar decline to be gradual, with rebounds likely in the coming months
Mizuho:
- rate-cut expectations are already embedded in dollar pricing
- suggesting upcoming U.S. data and the Fed’s September decision may “temper not tear down” the greenback
- it would take more than a soft nonfarm payrolls print to significantly dent the currency
- U.S. trade policies continue to channel trade and capital flows toward the U.S., helping offset “Sell America” pressures.
