UBS Downgrades Long-Term USD Targets, Predicts Currency Rebound to Fade in September
UBS has downgraded its long-term US dollar targets, anticipating a fade in the currency's rebound early in September. The Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower to 101.655 at 08:45 ET (12:45 GMT), after reaching a two-week high of 101.79 earlier in the week.
The Swiss bank analysts noted market fears of negative seasonal patterns in September over the past decade, with US August employment data due on Friday adding to concerns. Despite potential near-term USD rebounds, UBS expects structural weakness in the currency towards the end of 2024 and 2025. They predict EURUSD at 1.12 by year-end and 1.15 by end-2025, driven by a decline in 'US exceptionalism' rather than renewed enthusiasm for EUR.
In conclusion, investors should be cautious about the USD's future performance and consider positioning for potential weakness. The analysis suggests that geopolitical factors in the US and Europe may not be significant until more transparency is achieved, leaving traditional macro trends to dictate market movements.
