Robin Brooks and Michael Cahill, economists at Goldman Sachs wrote that they believe that the current market for a weaker dollar is too anxious about the weak US dollar for the following reasons
First, Figure 1 shows since 2014, dollar-weighted index against major currencies trend. Red arrows indicate the European Central Bank and the Bank of Japan easing measures in terms of driving the dollar role, the pink arrow indicates the limited role played by the Fed’s policy shift (end of 2014, the Fed abandon forward guidance, the dollar being a little boost). In short, the current dollar weakness is not affected by the Fed’s influence, but the Bank of Japan and European Central Bank policy change results. Of course, the dollar rallies or be reversed in 2014, but the European Central Bank and the Bank of Japan need to reduce irritation. We expect these two would run counter to the central bank. As the Fed is prepared to take easing, the dollar may be pared gains in 2014. However, we expect the Fed will run counter to, the Bank is expected to cut the current economy to the end of 2019 the Federal Reserve will raise interest rates by 300 basis points.