UBS analysts warn that trade wars continue to pose a threat to the US dollar.

  • They note that some U.S. trade partners may delay striking deals with a potential Trump administration, hoping for more favourable terms, which could lead to a fresh round of tariff escalations and increase downside risks for the dollar.
  • UBS sees limited scope for the Fed to hike rates, which would normally support the dollar.
  • Instead, they expect upcoming data to show the economic toll of tariffs, prompting markets to anticipate rate cuts.
  • As a result, UBS projects a weaker long-term outlook for the dollar.
US dollar banknote sinking
Source: Forex Live