Citi Turns Bearish on Dollar: Treasury Buyback Expansion, Rate Hike Expectations Fading, and Election Risks Weigh

Citigroup's currency strategy team has lowered its three-month dollar index forecast from 102.12 to 98.34, turning bearish in the near term. Key drivers include: the U.S. Treasury's announcement to double the buyback scale of 10- to 30-year Treasury bonds, which is expected to depress yields and raise concerns over financial repression; fading expectations for Federal Reserve rate hikes; and political uncertainty ahead of the midterm elections.