After the US dollar fell to its lowest in three months against its six major rivals, the Wall Street strategists, including Goldman, JPMorgan, Deutsche Bank and Citigroup, argued in recent days that the currency’s long rally could be finally over, as cited by the Financial Times (FT).
“Several props for the dollar have recently fallen away or begun to wobble.“
“We had been discouraging investors from putting dollar shorts in their portfolios during the past few months because of our concern about the [backdrop], but that has changed.”
“Big economies including China’s had begun to reopen with low infection rates, while the Franco-German proposal for an EU recovery fund had boosted the euro by easing fiscal concerns across Europe.
“We now think it is appropriate for investors to position for dollar downside in their portfolios.”
Brighter sentiment over global growth, as lockdowns were eased, had become a “key driver” of the dollar sell-off.”
“We no longer have the confidence to stand in the way of this optimism and further neutralise our previously defensive trade recommendations.”
“If the global economy really is bottoming out and rebounding again, and US interest rates are at zero and potential growth is lower than emerging markets, we could see the dollar enter into a bear market that could last for five to 10 years.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.