Macro strategist Henrik Zeberg has warned that the U.S. dollar is set for a sharp decline over the next two to three months.
According to Zeberg, such a move would create a classic trap, first fueling a final surge in risk assets before reversing sharply, he said in an X post on October 6.
The Swissblock strategist argued that the Dollar Index, trading near 102 and close to multi-month highs, is about to break lower.
“First, the dollar is about to fall – fast and hard – over the next two to three months. That decline will look like confirmation of everything the dollar bears have said for years,” Zeberg said.
He expects the decline to breach a long-term trendline dating back to 2011, reinforcing long-running narratives around dollar debasement.
In his view, this phase would provide a temporary boost for stocks, cryptocurrencies, and emerging markets as liquidity conditions ease and investors interpret the weaker dollar as a sign that risk assets remain unstoppable.
Zeberg described the stock market bubble as the fuse, private credit as the dynamite, and the dollar as the chain reaction.
He contends that once the initial decline runs its course, the dollar will not simply stabilize but stage a powerful squeeze.
This rebound, he argued, would be driven less by renewed confidence in the U.S. economy and more by the structure of the global financial system, where much of the world owes dollars rather than merely uses them.
Rising credit stress and a business cycle model that has entered contraction underpin Zeberg’s outlook, conditions he says resemble those seen before past financial crises.
Zeberg’s increasing bearish outlook
The warning follows a series of increasingly bearish calls. For instance, on October 3, Zeberg pointed to slowing economic activity, noting September job growth of just 29,000 and a 12-month average of about 56,000. He argued that credit stress is beginning to emerge even as stocks may have one final rally left.
At the same time, Zeberg described artificial intelligence as both a genuine technological revolution and a classic bubble.
Comparing today’s AI spending boom to past waves such as railroads, electrification, and the dot-com era, he argued that investors often correctly identify transformative technologies but misjudge valuations and timing. He warned that AI investment relative to GDP has surpassed historical precedents, increasing the risk of future disappointment.
In late September, Zeberg argued that current conditions resemble 1929 more closely than either 2000 or 2008, citing a combination of extreme equity valuations, economic weakness, soft labor markets, consumer strain, housing pressures, and restrictive Federal Reserve policy.
More recently, after the S&P 500’s total market capitalization surpassed $71 trillion, he said the advance fits the profile of a blow-off top. Zeberg has repeatedly characterized the expected final rally as a sign of market excess rather than economic strength.
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