Dollar bears may still be reeling after the currency popped higher in the wake of last week’s surprise shift in interest rate forecasts by Federal Reserve policy makers. But they shouldn’t give up on prospects for a weaker dollar over the longer term given underlying fundamentals, according to a Goldman Sachs strategist.
The dollar soared last week, with the ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, jumping 1.8% for its biggest weekly advance since September. The move took the index to a two-month high. DXY has given back around 0.5% this week, but remains up 1.9% year to date.
Read: Why the U.S. dollar is soaring — and what’s next — after Fed’s change in tone
To be sure, a more hawkish — or inflation-wary — Fed will limit downside potential for the currency, wrote Zach Pandl, co-head of…