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Investing.com - UBS expects the U.S. dollar to weaken in the second half of 2024, despite the greenback’s recent rebound in July, according to a report released Monday.
The Swiss banking giant views the dollar’s recent strength as temporary, noting that while trade war uncertainty eased last month with several trade deals announced, many trade-related issues remain unresolved, with several countries facing higher tariffs due to the absence of agreements.
UBS forecasts a gradual slowdown in the U.S. economy that will pave the way for Federal Reserve rate cuts later this year, potentially pushing the EUR/USD exchange rate toward 1.20, and recommends investors use the dollar’s recent rebound to reduce or hedge USD exposure.
The bank favors the euro, Australian dollar, and Norwegian krone against the U.S. dollar, describing the euro as "the prime default option for investors wishing to move out of the USD, due to its liquidity and market depth," despite its 2% yield disadvantage.
UBS also sees opportunities in selling USD upside against all other G10 currencies as well as emerging market currencies like the Mexican peso, South African rand, and Israeli shekel, noting that currency volatility has normalized after peaking in April.
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