Nomura FX Strategy Research makes an interesting observation about the how the USD has tended to follow a cycle where it enjoys many years of gains followed by many years of declines, and on average the dollar trends tend to last about 7 years.
"Admittedly, seven is an average. Dollar trends can be longer or shorter, but importantly there are fundamental causes for this dollar cycle. The crucial point is that the business cycle which most investors focus on tends to be much shorter than the dollar cycle," Nomura argues.
Taken together, they indicate that the dollar is currently at the early stages of a multi-year decline. This could see the euro eventually reach 1.40 or higher and USD/JPY fall towards 90 or lower," Nomura concludes.
Source: Nomura Securities ResearchOriginal Article
