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Our Fundamental View on the Dollar Has Not Changed
Despite its recent rally, we continue to anticipate a weakening dollar in the medium term.
May 16, 2018
The U.S. dollar has rallied quite a bit since April 16—rising by slightly more than 4% through May 141—in seeming contrast with our recent blog (from March 6) arguing that it would continue to weaken. Yet our fundamental view on the dollar, as articulated in that blog, has not changed.
Why We Still Believe The Dollar May Weaken Over the Longer Term
First, to put this rally in context, the U.S. Dollar Index (DXY)2 started the year at 92.24 and is currently (as of May 14) at 93.18, having returned a bit less than 1% as of May 14. In other words, the dollar’s move against a basket of developed-economy currencies has been small on a year-to-date basis.