Bank of America Merrill Lynch Global Research discusses the scope of the US verbal and/or formal intervention to weaken the USD.
"President Trump is not pleased with the strength of the dollar, arguing time and again that the strong dollar is "unfair". The strong dollar stands in the way of his goal to boost exports and support the US manufacturing sector. So what can he do about it? For one, he could encourage the Federal Reserve to ease policy, thereby weakening the dollar. The Fed has shifted and is guiding toward cuts but with limited impact on USD so far," BofAML notes.
"Another option is to "talk" the markets into weakening the dollar. At the beginning of his administration, this proved to be successful but there appear to be diminishing effects. This is probably because the dollar has been on a steady rising path. If verbal intervention is no longer an option, the risk is that the focus moves to formal currency intervention. This is not our baseline expectation, but the risks are rising," BofAML adds.