Financial analysts at Citi indicated a potential halt in the recent rally of the US dollar, citing a series of economic indicators that may temper its strength.
The broker pointed to the latest manufacturing data and commodity support as key global factors but also noted a seasonal trend of diminishing positive data surprises as the second quarter approaches.
Yesterday's Purchasing Managers' Index (PMI) figures fell short of expectations, leading Citi's economic surprise index to drop to its lowest point in several months. This development serves as a reminder that the market is entering a time traditionally marked by fewer positive economic surprises.
Citi's economists are projecting that the first-quarter Gross Domestic Product (GDP) will not meet the consensus expectations, although they anticipate strong consumer spending to continue.
Additionally, they forecast that this Friday's core Personal Consumption Expenditures (PCE) price index will likely come in below the Federal Reserve's predictions.
If these forecasts prove accurate, Citi believes that the strength of the US dollar could be limited on a tactical basis. The analysis suggests that upcoming economic releases could play a crucial role in determining the short-term trajectory of the US dollar's value in the currency markets.
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