Dollar is reaching key levels: Citi

Citi FX analysts on the recent weakness in US dollar. They said: "The USD continues to follow US yields lower, with the DXY Index approaching major support levels around 100.30-100.82 (series of 2023-2024 lows and the 200wma). While above there, DXY remains in the range of the past two years, and risk/reward is attractive for USD longs here, especially as: (1) we head into potentially weaker EU PMI and wage data this week; (2) Powell may not “out dove” what markets are already pricing; (3) “Trump trades” like long USD may get a boost if RFK Jr. drops out and endorses Trump (possibly this week, ABC News 08/21/2024). We continue to favor a stronger USD in H2 ’24 and initiated a short EURUSD trade this week through a long 2m 1.08 put."

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