The firm argues that things aren't all bad for the dollar despite a dovish Fed

USD

According to a note by the firm's FX strategist, Daria Parkhomenko, the greenback should strengthen modestly in the short-term even if the Fed cuts rates as they will still remain higher than most in the developed world.

"Although our US economists have penciled in a total of 50 bps of rate cuts for 2019, this does not change our near-term view for moderate USD gains within the G-10 space. The USD would remain as G-10's highest yielder and that should lend support to the USD in a low volatility/carry-obsessed world."

It's a similar argument that I made last month in this post here about yields. On paper, sure it does present a case for a limited scope of weakness in the dollar. However, when you consider that US 10-year yields have fallen off by ~1.3% since October whereas Germany 10-year yields have only fallen off by ~0.8%, it doesn't paint a pretty picture especially if the Fed is looking for more than just an "insurance rate cut" down the road.