Dollar Downturn Could be Nearing its End

Although the dollar and UUP have struggled against the backdrop of two interest rate hikes by the Federal Reserve, some currency market observers see potential for the greenback to rally in the second half of 2017.

“According to Ciana, seasonal data shows that in the month of August, the U.S. dollar has actually held strong against nine emerging market currencies, especially the Mexican peso. In other words, not only should investors be long the U.S. dollar, but they may also possibly want to short the peso,” reports CNBC.

Related: Getting Paid to Minimize Currency Risk

Heading into 2017, many bond market participants were betting the Fed would raise interest rates three times, but some market commentators believe two is the appropriate number of rate hikes this year. The Fed boosted rates in March for the first time this year and the third time in 15 months, but a dovish tone following the March meeting muted the dollar’s reaction. The dollar has struggled following the June rate hike as well.

For more information on the USD, visit our U.S. dollar category.