USD: the reasons why the dollar will likely continue its decline on the forex (Nomura)

Nomura believes that the dollar will continue to decline on the forex, and lists the underlying reasons behind it.

"Although the dollar recorded a recovery during the last sessions, we continue to believe that the overall trend remains downward.

The weakening of the dollar that we observed this year was driven by more factors than by the simple drop in US rates. The current account also has weight - the United States seems to offer real rates too low for the size of its deficits. To counter this cycle, either the dollar has to shrink to make US assets more attractive, or US rates have to go up, or both.

This factor probably exerted downward pressure on the dollar.

We also continue to believe that the Trump administration will lead a weak dollar policy, and that US dollar risks will still weigh on the dollar (as the eurozone situation continues to improve)."