Merril Lynch Says USD Bears to Win Out in September

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.

via MarketWatch

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza