UBS(US:UBS) Xin Hua Cai Jing·2025-06-18 00:26Group 1 - The core viewpoint of the report is that the US dollar index has fallen to its lowest level in three years due to US tariff policies and economic uncertainty, and it is expected to remain weak over the next 12 months [1] - As of mid-June, the dollar index has dropped nearly 10% this year, with the CIO noting that harsher-than-expected US tariff measures have undermined confidence in the "American exceptionalism" narrative [1] - The report indicates that despite previous support from expansionary fiscal policies and tightening monetary policies, the situation is changing as US government spending is constrained and trade war uncertainties persist [1] Group 2 - The report suggests that investors should adopt a strategy of "reduce, hedge, and diversify" to manage dollar risk exposure, predicting that the euro to dollar exchange rate could rise to 1.20 by June 2026 [1] - Technical analysis shows signs of stabilization for the dollar, with a potential bullish divergence indicated by the relative strength index (RSI) despite the dollar hitting new lows [2] - Market sentiment is extremely pessimistic, with current bearish sentiment towards the dollar reaching extreme levels not seen in the past 20 years, which could signal a market correction [2] Group 3 - The historical high correlation between the dollar and US Treasury yields has weakened, with the correlation coefficient dropping from 0.86 to 0.42 this year, suggesting potential for a dollar rebound if the relationship normalizes [2] - The dollar index is close to breaking a key downward trend line, with a breakthrough potentially leading to a significant improvement in the technical outlook [2] - If the dollar falls below the June 12 closing price of 97.92 and the RSI weakens again, expectations for a dollar rebound may be dashed, indicating a critical moment for market direction [3]