Statement from Federal Reserve Chairman Jerome Powell on Friday increased the chances that the central bank will pause its current policy of raising interest rates. Goldman Sachs advises traders and investors to take advantage of the potential weakening of the US dollar as a consequence of "pushing the brakes".
"In combination with the softer data for the US economy since December, we think that the Fed with a data-driven approach from the economy will create room for a further decline in the US dollar." - share Goldman's strategists with Zach Pandl. "We therefore recommend taking short positions at DXY (the dollar index), with an initial target of 93 and a stop at 97.5". - they add in their statement.
The dollar index was less than 93 in May as the US currency picked up momentum after the US economy's excellent performance. The tune at a level of 97.5 is the peak reached in November month.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
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