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Analysts at Goldman Sachs note that they continue to maintain a structurally bearish view on the US dollar in the medium to long-term horizon.

Key quotes

“We do not see a reason to change our structurally bearish views.”

“First, FX markets are more sensitive to changes in front-end rates, which are still pinned down by the Fed’s average inflation targeting framework (we are skeptical US fiscal stimulus will lift the Dollar for this reason).”

“Second, while the Fed may be done easing, changes to its asset purchase program are likely a ways off: Vice Chair Clarida said Friday that he did not expect any QE “tapering” until 2022 (consistent with GS expectations).”

“Third, as a simple empirical matter, the trade-weighted Dollar tends to depreciate slightly when the US yield curve bear steepens; the same goes for the DXY index when the Yen is excluded.”