Neuberger Berman Strategists Predict Further Dollar Decline Amid Shifting Investor Flows

Investment Flows and Risk Sentiment Affect Dollar's Performance

According to strategists at Neuberger Berman, the recent weakness of the U.S. dollar can be attributed to shifts in global investor flows. In their analysis, they suggest that the dollar’s decline may stem from softened expectations for U.S. economic growth, but it can also be explained by the rebound in U.S. risk assets. This dynamic occurs when investors rotate out of U.S. Treasuries and into equities, leading to a weaker dollar. However, if non-U.S. investors become risk-averse and shift away from U.S. markets, there is no inflow into dollar-denominated assets. This results in higher U.S. stock prices and a weaker dollar.

Outlook for Further Dollar Decline and Market Volatility

Neuberger Berman predicts an additional 3%-5% decline for the U.S. dollar against the euro and yen through the end of the year, accompanied by increasing market volatility. The DXY dollar index recently fell by 0.2%, dropping to 100.836. The strategists believe that global market dynamics will continue to affect currency fluctuations, and the dollar may face further oscillations in the coming months.