The strength of the dollar has been the talk of the currency trading world for most of the year. The US Dollar Index, which measures the value of the dollar against a basket of world currencies, rose to a two-decade high in September. It also hit an all-time high against several categories. major currencies in recent weeks, including the British pound. Some market participants now believe the dollar rally, driven by the Federal Reserve raising interest rates more aggressively than other central banks, could disappear within the next three to six months. Analysts expect the dollar to fall against 18 out of 38 currencies in the fourth quarter of this year, according to FactSet data. Furthermore, they forecast the drop would extend to 10 other currencies in the second quarter of next year. CNBC Pro has gathered opinions from four investment banks and brokers on where they see the dollar heading. UBS UBS considers selling the dollar against G-10 currencies a “top investment idea for 2023.” The Swiss bank says it will be less about investment options and more about portfolio rebalancing potentially triggering a sell-off in the dollar. According to the investment bank, negative interest rates for many years have led to a significant accumulation of dollars around the world. For example, Japan’s largest pension fund holds more than $500 billion in assets, with only a fraction of it being insured. With the dollar index rising to its highest level since 2001, UBS said such investors would start selling dollars to reduce the risk of future losses. The bank suggested that traders can look at the worst USD put options, derivatives contracts that increase in value as the dollar depreciates, against a basket of currencies such as EUR, JPY and GBP. Dutch multinational bank ING thinks that while the dollar will strengthen in the near-term, the Federal Reserve will likely give “all clear” on further rate hikes in March. next year. Chris Turner, global head of markets at ING, said the Fed’s pivot alone may not be enough for the dollar’s decline. “You need the pull factor of some growth in the Eurozone or China to get the money out of maybe a 5% yield dollar by then in Q2 23,” he said. “. Turner warned that the dollar’s decline could be delayed if inflation proves to be more “sticky” than expected and prompts the Fed to raise interest rates higher. When is the right time, he said, and not now, traders can look at “put spread, which will not depend on the time of the drop.” From a technical point of view, the dollar will reverse, said BCA research analysts at BCA Research. Countering UBS’s view, BCA also suggested that “long-term investors should start selling USD when there is strength.” The Montreal-based investment research group also said a number of catalysts could put more downward pressure on the dollar, including central banks catching up with the Fed with rate hikes or increased activity. China’s economic performance, among other factors. Chester Ntonifor, forex strategist at BCA Research, said: “We are only halfway through this checklist in our view but nonetheless, conditions are applying for a bearish view. price of the US dollar”. Goldman Sachs The Wall Street bank remains bullish on the dollar over the next three months and sees certain G-10 coins recover only in six months. Still, Goldman favors the Brazilian real, among several other currencies, in the short term against the dollar following the election of Luiz Inacio Lula da Silva. The team is led by Kamakshya Trivedi, head of global FX, rates and EM strategy at Goldman Sachs.