Citigroup Strategists Downbeat on Dollar Amid Fed and Treasury Moves

Citigroup's currency strategists have issued a bearish forecast for the US dollar, citing factors such as a less aggressive Federal Reserve and the upcoming midterm elections. The strategists point to the recent decline in the dollar index, which hit a three-month low of approximately 98.8 on August 20, 2026.

The US Treasury's decision to double its long-dated debt buybacks from $2 billion to at least $4 billion per operation beginning September 9, 2026, is also seen as contributing to the dollar's decline. This move has led to lower long-term Treasury yields, putting downward pressure on the dollar.

The outlook for gold prices appears to be influenced by the weakening dollar, with market participants interpreting it as supportive of higher gold prices due to their historical inverse relationship. The market probabilities for gold hitting $4,600 in August have surged to 57% from 33% a week ago.