USD: Tactical bounce likely over as structural downside risks set to dominate – Deutsche Bank

Analysts at Deutsche Bank explain that multi-year dollar upcycle was interrupted this year as broad dollar troughed in mid-September and bounced until early November.

Key Quotes

“Tactical bounce is likely over now.”

“Structural downside risks dominate into 2018

• Tax reform to deliver unfunded tax cuts of $1.5trn at best, and Fed terminal rate pricing now reflecting it more fairly
• Structural euro upside on robust eurozone growth, receding political risk, and increasingly hawkish risks to ECB forward guidance.”

“Overvaluation to weigh on broad dollar, not just vs. euro.”