Citi forecasts further decline in US dollar amid slowing global pace by Investing.com

Citi expressed an outlook that anticipates further weakening of the US dollar in the near term, despite maintaining a bullish stance on the currency over the next two months. The brokerage stressed that this outlook does not favor a broad-based strengthening of the dollar, as current market conditions suggest that safe-haven currencies such as the Japanese yen could outperform, albeit with unattractive risk/reward for long yen positions.

Citi’s analysis suggests that high-beta forex currencies are likely to see more significant declines against the dollar in the coming weeks. The company’s comment indicates a cautious attitude towards the euro, suggesting that the context is not favorable for the European currency. According to Citi, the slowdown in global manufacturing is expected to have a more pronounced impact on regions outside the United States.

Citi’s commentary also refers to the monetary policy of the European Central Bank (ECB), which is driven by a single mandate. Citi believes that this approach may cause the ECB to delay responding to economic conditions. However, the firm also sees emerging signs that the ECB is showing more concern about growth, which could have implications for the currency market.

Citi’s outlook on the US dollar and other currencies comes amid a complex global economic environment, with central banks navigating between inflationary pressures and the need to support growth. The firm’s opinion suggests that investors may need to prepare for continued volatility and dispersion in the performance of various currencies.

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