On September 11th, Caixin reported that Goldman Sachs forex analyst Isabella Rosenberg said that the upcoming rate cut by the Federal Reserve poses limited downside risks to the US dollar, as other central banks are also easing their policies.

In a report to clients, she actually stated that this synchronized rate cut cycle usually leads to a stronger US dollar. She arrived at the above conclusion based on an analysis of rate cut cycles since 1995 and the level of policy coordination among developed countries.

"If most central banks relax monetary policies together, we can expect that this will limit the impact of the Federal Reserve's monetary policy easing on the US dollar. Although the market expects the Federal Reserve to turn faster, we still believe that if the Federal Reserve gives other central banks the room to do so, they will further relax their policies," she wrote.

The Federal Reserve will hold its interest rate meeting next week, joining the ranks of central banks such as the European Central Bank (ECB) and the Bank of England that have already begun to ease policies. Currently, the market generally expects a high probability (66%) that the Federal Reserve will cut interest rates by 25 basis points in September, but there is also a 34% chance of a 50 basis point cut.

As traders prepare for the Federal Reserve's first rate hike, the US dollar has recently faced some pressure. In theory, a rate hike by the Federal Reserve would reduce the incentive for investors to buy US Treasury bonds, thereby weakening demand for the US dollar.

But according to Rosenberg, this dynamic only occurs when the Federal Reserve is not in sync with other major central banks, which usually leads to a weaker or stable US dollar. However, in the current situation, US interest rates are still relatively high and the exchange rates of other countries are falling, which to some extent weakens the motivation to sell the US dollar and buy assets elsewhere.

At the same time, given the US dollar's status as a safe-haven currency, this global synchronized rate cut may also indicate concerns about economic growth, thereby boosting the US dollar.

"Using a single variable - this time it is the policy direction of the Federal Reserve - to explain the performance of the US dollar is usually not very successful. Obviously, the relative background of foreign exchange is more important." she wrote.

Divergent views on Wall Street.

However, some Wall Street analysts still believe that the future of the US dollar is closely related to the Fed's interest rate cuts. Brian Rose, senior US analyst at UBS Global Wealth Management, said: "We have always believed that once the Fed starts cutting interest rates, the US dollar will weaken. We still hold this view."

Recently, with the continuous pressure on the strong US dollar from the expected interest rate cuts by the Federal Reserve, the pace of the dollar's decline is accelerating. Data shows that the US dollar index has fallen 5% from its 2024 high, approaching its lowest level in a year.

Other analysts point out that many are waiting for more evidence of a slowdown in the US economy before further bearish on the US dollar. Thanos Bardas, Co-Head of Global Investment-Grade Fixed Income at Neuberger Berman, said: "Although the US economy is slowing down, it is still in a very healthy state."

In addition to the economic conditions, the outcome of the November US presidential election may also affect the fate of the US dollar. Bardas pointed out that in fact, many of Trump's policies, such as increasing tariffs and tax cuts, may strengthen the US dollar.

Steven Englander, global head of G10 forex research at Standard Chartered Bank, pointed out that if the Democratic presidential candidate Harris wins, it may lead to higher taxes. If economic activity slows down, the Fed will face greater pressure to ease monetary policy.