In a recent analysis, Derek Halpenny of Mitsubishi UFJ stated that even if the Federal Reserve hints at an imminent decision on rate cuts, the dollar is unlikely to continue its downward trend. Halpenny pointed out that recent price trends indicate a decoupling between U.S. bond yields and exchange rates. Additionally, fragile risk appetite is bolstering demand for safe-haven assets like the dollar.
Halpenny emphasized that any depreciation of the dollar resulting from signals of rate cuts would likely be short-lived. This is especially true given that the money market has already fully digested the possibility of a rate cut in September. He added that other factors, such as declining commodity prices and increased stock market volatility, do not support continued selling of the dollar.
