Risk-reward in dollar shorts falling
The lack of positive reaction post US news has been a strong source of frustration for dollar bulls. The lack of movement in US Treasury yields is a particular hindrance especially given the dollar was already displaying a weakening sensitivity to such changes. Performance may remain subdued, but this does not mean in a tame yield environment there is reason to be short dollars either. Risk reward is already limited, while outright US yields (and real rates) will act as a floor in limiting dollar weakness.
Read the full report: UBS