--- title: "Citigroup Turns Bearish on the US Dollar: Triple Pressure from Expanded Treasury Buybacks, Fading Rate Hike Expectations, and Election Risks" type: "News" locale: "en" url: "https://longbridge.com/en/news/296546752.md" description: "Citigroup's currency strategy team has lowered its three-month forecast for the US Dollar Index from 102.12 to 98.34, shifting to a near-term bearish stance. Key drivers include the US Treasury's announcement to double the scale of buybacks for 10- to 30-year Treasury bonds, which is expected to suppress yields and raise concerns about financial repression; cooling expectations for Federal Reserve rate hikes; and political uncertainty stemming from the approaching midterm elections" datetime: "2026-08-20T23:52:25.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296546752.md) - [en](https://longbridge.com/en/news/296546752.md) - [zh-HK](https://longbridge.com/zh-HK/news/296546752.md) generator: "portal-rs" --- # Citigroup Turns Bearish on the US Dollar: Triple Pressure from Expanded Treasury Buybacks, Fading Rate Hike Expectations, and Election Risks Cooling expectations for Federal Reserve rate hikes, the US Treasury's expansion of its bond buyback program, and political uncertainty arising from the approaching midterm elections are collectively weighing on the outlook for the US dollar. On Thursday, Daniel Tobon’s currency strategy team at Citigroup released a research report, lowering its three-month forecast for the US Dollar Index from 102.12 to 98.34, thereby shifting from a previously relatively neutral stance to a near-term bearish one. **Citigroup characterized the US Treasury's announcement of expanded bond buybacks as "another factor bearish for the US dollar." Meanwhile, Citigroup raised its three-month forecast for the EUR/USD exchange rate to 1.1750, citing expectations that the European Central Bank will raise interest rates by 25 basis points in September, while market bets on Federal Reserve rate hikes continue to shrink.** Wallstreetcn mentioned that following the joint intervention in the yen by the US and Japan, Bessent's latest move is to expand US Treasury buybacks. The US Treasury announced that it would "at least double" the scale of buybacks for 10- to 30-year US Treasuries. As of the Asia-Pacific session on Friday, the US Dollar Index was quoted at 98.8, with the EUR/USD trading around 1.168. ## US Treasury Expands Buybacks The direct trigger for Citigroup's shift in stance was the US Treasury's announcement that it would double the scale of buybacks for 10- to 30-year Treasury bonds before November. **Strategists wrote in the report that Treasury Secretary Bessent's move aims to lower long-term borrowing costs but is likely to come at the expense of a weaker US dollar.** According to Citigroup's analysis, this operation creates bearish pressure through **two channels**: first, by pushing down US Treasury yields; and second, by triggering market concerns about financial repression. The backdrop for the Treasury's expansion of buybacks is the continuous rise in US government borrowing costs recently, with both the 10-year and 30-year Treasury auctions held in August recording the highest interest rate levels since the 2000s. ## The Federal Reserve and Political Risks In addition to the Treasury's operations, Citigroup strategists pointed out that market expectations for Federal Reserve rate hikes, which had previously boosted the US dollar, are being priced out. **On the political front**, strategists warned that as the November midterm elections approach, investors may tend to avoid long positions in the US dollar due to "rising political uncertainty in the US and the possibility of election disputes as a tail risk." **However, Citigroup has not changed its long-term view on the US dollar, still believing that the US economic growth outlook is superior to that of other G10 economies.** The team also listed potential risks to the new forecast: if US-Iran conflicts lead to disruptions in oil transportation through the Strait of Hormuz, and if capital expenditures related to artificial intelligence expand significantly, inflationary pressures could reignite, prompting the Federal Reserve to restart rate hikes, which would challenge the aforementioned bearish logic on the US dollar. ### Related Stocks - [C.US](https://longbridge.com/en/quote/C.US.md) - [UUP.US](https://longbridge.com/en/quote/UUP.US.md) - [USDU.US](https://longbridge.com/en/quote/USDU.US.md) - [UDN.US](https://longbridge.com/en/quote/UDN.US.md) - [C-R.US](https://longbridge.com/en/quote/C-R.US.md) ## Related News & Research - [Japanese bond ETFs attract a record $1.5 billion in net inflows in 2026 so far, Morningstar say](https://longbridge.com/en/news/296877740.md) - [Citigroup Sees Unusual Options Activity and $223 Million Block Trade After Hours](https://longbridge.com/en/news/296785307.md) - [Citi Appointed as Depositary Bank for Agilyx ASA's ADR Program | C Stock News](https://longbridge.com/en/news/296578896.md) - [Bessent stops short of new bond measures amid report US Treasury may tap cash pile for buybacks](https://longbridge.com/en/news/296859051.md) - [The 10-Year Treasury Has A 5% Ceiling – 'Go Long SOXX', Analyst Says](https://longbridge.com/en/news/296795224.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**