The US dollar, which has recently climbed close to its highest level of the year, is predicted to lose its strength in the coming months, according to UBS [5e4d4dbc]. UBS attributes the dollar's current strength to factors such as the Federal Reserve keeping rates high while other major central banks have started cutting rates [5e4d4dbc]. However, UBS believes that the recent strength of the US dollar will fade due to a slowdown in US growth, which will allow the Federal Reserve to start cutting rates in September [5e4d4dbc]. UBS also expects concerns about the US fiscal deficit to be a headwind over the longer term [5e4d4dbc]. As a result, UBS recommends investors to use periods of near-term dollar strength to reduce exposure to the currency or engage in volatility-selling strategies [5e4d4dbc].
This prediction from UBS aligns with the Reuters poll of FX strategists, which also suggests a weakening of the US dollar in the coming months [0f91811e]. Both reports indicate a potential shift in market sentiment towards the US dollar, with expectations of a decrease in its strength [5e4d4dbc] [0f91811e].