Citi expressed a perspective that anticipates an extra weakening of the US greenback within the close to time period, regardless of sustaining a bullish stance on the forex for the following one to 2 months. The brokerage agency highlighted that this outlook doesn’t favor a broad strengthening of the greenback as the present market circumstances counsel that safe-haven currencies, such because the Japanese yen, could outperform, albeit with unattractive danger/reward for lengthy positions within the yen.

Citi’s evaluation suggests that top beta international alternate currencies are more likely to expertise extra important declines in opposition to the greenback within the upcoming weeks. The agency’s commentary signifies a cautious stance on the euro, suggesting that the backdrop isn’t favorable for the European forex. In keeping with Citi, the worldwide manufacturing slowdown is anticipated to have a extra pronounced affect on areas exterior the USA.

The commentary from Citi additionally touches on the European Central Financial institution’s (ECB) financial coverage, which is pushed by a single mandate focus. Citi believes that this method could trigger the ECB to lag in its response to financial circumstances. Nevertheless, the agency additionally notes rising indicators that the ECB is displaying better concern concerning development, which may have implications for the forex market.

Citi’s outlook on the US greenback and different currencies comes amid a posh world financial atmosphere, the place central banks are navigating between inflationary pressures and the necessity to assist development. The agency’s view means that traders could must brace for continued volatility and dispersion within the efficiency of various currencies.

This text was generated with the assist of AI and reviewed by an editor. For extra data see our T&C.