Dollar at Crossroads as 'Sell America' Strategy Revives

The US dollar is at a crossroads as the 'Sell America' strategy returns. This shift has led to a rebound in bond yields, but its impact on the dollar remains uncertain.

Recent events have revived this strategy, which had faded from view since spring 2025. The Treasury's plan to increase minimum purchase size for Treasury bonds and Scott Bessent's statement that the Treasury has tools to bring borrowing costs down have sparked concerns among investors.

The US economy remains strong, with the August Composite PMI jumping to 56, its highest level since April 2022. This growth is driven by stronger demand and improving business expectations, which have fueled a surge in hiring. The eurozone Composite PMI also rose to 52.1 in August, beating expectations.

However, these positive indicators are being pulled in two directions. On one hand, the 'Sell America' strategy is weighing on the dollar, as seen in spring 2025. On the other hand, parallels with the Japanese yen suggest that EUR/USD bears may still have a chance to recoup their losses.

The price chart of EURUSD indicates that selling from the 1.17 level was a correct decision. If the major currency pair breaks through the 1.167 support level, it could provide an opportunity to add to short positions.