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Driven by the hawkish stance of Federal Reserve Chairman Kevin Walsh and AI capital inflows, net long USD positions have risen to $29.4 billion. Bank of America has lowered its year-end target for EUR/USD from 1.20 to 1.15 and expects the Federal Reserve to raise interest rates three times this year. Man Group anticipates the US dollar will still have about 5% upside by year-end. Goldman Sachs expects currencies of Asian oil-importing countries such as the Thai Baht and the Philippine Peso to come under pressure.

1. Although the market generally expects gold prices to rebound after falling below $4,000 per ounce, Capital Economics economist Hamad Hussain believes that this precious metal still has further downside potential over the next 18 months. 2. He points out that expectations of Federal Reserve interest rate hikes will push up real yields, thereby putting continued pressure on yieldless gold. In addition, a potential sharp stock market crash could further exacerbate the decline in gold prices—during sudden sell-offs in the stock market, investors are often forced to liquidate quality assets to meet margin calls, and gold is not immune. 3. Capital Economics expects gold prices to fall to $3,500 per ounce by the end of 2026, and to drop further to $3,250 by the end of 2027.

BlockBeats News, June 26th. The US dollar has been strengthening since June, with the Bloomberg Dollar Spot Index rising by 2.1% month-to-date, nearing its best monthly performance in the past year and currently at a high not seen since November last year. Major Wall Street institutions such as JPMorgan Chase, Goldman Sachs, and Bank of America believe that there has been a significant shift in market expectations regarding the US dollar, with the previous prevalent narrative of "de-dollarization" clearly waning. Institutions generally attribute this shift to three main drivers. Firstly, Federal Reserve Chair Powell's hawkish stance—after emphasizing price stability and sending a clear tightening signal, JPMorgan Chase's Co-Head of Foreign Exchange Strategy pointed out that "the Fed has triggered the logic for a dollar rally, with other central banks unable to catch up, leading to a persistent narrowing of interest rate differentials." Secondly, the AI investment frenzy driving continuous capital inflows into the US, as Goldman Sachs' Chief Forex Strategist stated that "AI trading is boosting US growth expectations and stock market returns, making it an extremely attractive destination for capital." Thirdly, the relative resilience of the US economy has reignited the dominant logic of the "American exceptionalism." Positioning data confirms the above assessments, with CFTC data showing that as of June 16th, hedge funds and asset managers held a long USD position of $29.4 billion. Bank of America has lowered its year-end Euro to Dollar target from 1.20 to 1.15 and expects the Fed to raise interest rates three times this year. ING Group forecasts approximately a 5% upside potential for the US dollar by year-end. However, the upside potential remains constrained. Analysts point out that the rate hike expectations have already been partly priced in, with the option premiums for hedging against USD appreciation nearing levels not seen in over a year. For a more significant appreciation to occur, the Fed would need to raise rates beyond the current market expectations. Goldman Sachs predicts that currencies of Asian oil-importing countries such as the Thai Baht and the Philippine Peso will face the most pressure, while high-yield and trade-sensitive currencies will experience relatively limited impact.