UBS Lowers US Dollar Targets and Suggests Selling into Strength

Key Takeaways:

  • 💵 UBS downgraded its long-term US dollar targets
  • 📉 Currency analysts recommend fading the USD rebound in early September
  • 📊 VIX volatility decreased but FX implied volatility remains high in carry pairs
  • 💹 USD could see a near-term rebound due to positive seasonal patterns
  • 🌍 UBS downgraded USD outlook into end-2024 and 2025 due to structural weakness anticipated later
  • 📈 Look to fade the currency’s rebound early in September
  • 📊 Market fears persist despite lower VIX levels
  • 🔍 Limited buildup of positions indicates limited FX blowup
  • 💱 Recommend taking advantage of near-term correction to position for more structural USD weakness later
  • 💲 UBS sees EURUSD at 1.12 by year end and 1.15 by end-2025
  • 📉 The firm suggests investors to take a bearish stance on the US dollar
  • 💪 UBS recommends selling into any strength in the US dollar

UBS Downgrades Long-Term USD Targets

  • UBS has downgraded its long-term US dollar targets, citing structural weakness anticipated later into end-2024 and 2025.

Analysts Suggest Fading USD Rebound

  • Currency analysts recommend fading the USD rebound in early September, as market fears persist despite lower VIX levels.

Near-Term Rebound for USD Expected

  • The USD could see a near-term rebound due to positive seasonal patterns, but investors are advised to take a bearish stance and sell into any strength in the currency.

Positioning for USD Weakness Later

  • Despite a corrective rebound in the USD anticipated in the near term, investors are recommended to take advantage of this correction to position for more structural USD weakness later on.

Implied FX Volatility Remains High

  • While VIX volatility has decreased, FX implied volatility remains high in carry pairs, indicating a potential limited FX blowup.

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