It’s been a rough year for the dollar already. But the U.S. currency might be facing one more selloff before rising interest rates carry it higher.
In a note published Wednesday, a team of currency and interest rate strategists at Bank of America Merrill Lynch said dollar bears might win out one last time in September as investors grapple with the outcomes of three events with the potential to upend global financial markets: Policy meetings at the Bank of Japan and Federal Reserve, and an unofficial gathering of the Organization of the Petroleum Exporting Countries.
The strategists shifted their view after the dollar failed to rally in response to the August jobs report last week. The charts, they say, now suggest the U.S. currency has further to fall before the rebound begins.
But the weakness will likely be short lived. It’s already looking stretched by a historical standpoint, the strategists said, noting that the dollar has fallen 18% against the yen in the last 12 months.
On Wednesday, the dollar slipped 0.3% to ¥101.74.