Citi Cuts Short-Term USD Forecast

Citigroup currency strategists have recently turned bearish on the U.S. dollar, as markets brace for a less hawkish Federal Reserve, the U.S. midterm elections, and the U.S. Treasury’s expanded debt buyback program. In a Thursday research note, the Citi team led by Daniel Tobon said it has cut its three-month forecast for the U.S. Dollar Index from 102.12 to 98.34. The shift follows the bank’s warning that Treasury Secretary Scott Bessent’s latest move to lower long-term borrowing costs—expanding buybacks of 10- to 30-year U.S. Treasuries—could come at the cost of a weaker dollar. The day before, the U.S. Dollar Index had dropped to its lowest level since May before stabilizing around 98.9. Tobon and his colleagues added that their stance on the dollar has been more neutral in recent months, and cautioned that risks may rise in the coming months.