• The world's reserve currency can expect a tough quarter ahead as "stars are aligned against" the greenback, according to a top currency strategist.
  • "This is one of the rare occasions when Europe will actually outperform the US," private bank Brown Brothers Harriman's head of global currency strategy told CNBC in an interview on Thursday.
  • The dollar index has lost over 7% in the last three months, while gold has touched a record high and shot past the $2,000 mark this month.
  • The strategist turned bearish against the dollar in April, when the US central bank began to pump record amounts of stimulus to shore up the economy against the economic downturn triggered by the COVID-19 pandemic.
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The US dollar is in for an unpleasant quarter, according to a currency strategist who believes the "stars are aligned against" the world's reserve currency.

The ability of the US government to fight the pandemic as successfully as other countries is acting as a drag on investor confidence in the dollar, Win Thin, global head of markets strategy at Brown Brothers Harriman, told CNBC on Thursday.

"This is one of the rare occasions when Europe will actually outperform the US," the strategist said in a CNBC "Trading Nation" interview. "The stars are aligned against the dollar."

The dollar index, which measures the performance of the dollar against six major currencies, has lost 7% over the last three months, falling to its lowest in over two years, while gold, which tends to profit from dollar weakness, has gained more than 30% in this time to hit record-highs above the $2,000 mark.

On Friday, the dollar index stood around 93.15. Thin predicts it will tease the 2018 low of 89.24 before the year ends. Indeed, the euro is 2020's top performing currency from amongst the G7, with a gain of 5% against the dollar.

"I do suspect given the cyclicals, we'll test the downside of that range, and for the dollar index, that's around 88," he said. "So, we've got some ways to go."

It was in April, when the Federal Reserve began to pump trillions of dollars into the economy to limit the damage from the pandemic, that Thin turned bearish against the dollar.

But he does not believe the weakening in the dollar will be long-lasting, as there's an ongoing debate over whether it's a "structural or cyclical decline."

"The Fed is being much more aggressive than other central banks, and the US economy is likely to underperform in the coming months due to the pandemic. So to me, that's a cyclical issue," he said.

Not everyone agrees on how long the world may see a weaker dollar.

Another strategist at Citigroup said last month that the dollar "could enter into a bear market that could last for five to 10 years."

Goldman Sachs too has said how some countries' strong fiscal positions and smooth reopening have created attractive opportunities to short the dollar.

The US healthcare system and its profit-driven nature have hampered its ability to fight the pandemic, according to a number of economists.

The US is projected to suffer the biggest increase in economic misery this year, as inflation slows and unemployment spikes, according to Bloomberg's Misery Index, which tracks 60 economies around the world.

The country dropped to No. 25 from No. 50 alongside Israel, Iceland, and Panama.

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