Investing.com – The U.S. dollar had a tough summer, falling sharply in August, but JPMorgan believes those predicting the currency’s demise are looking ahead.

As of 06:00 ET (10:00 GMT), the dollar index, which tracks the U.S. currency against a basket of six other currencies, was down 0.2% at 101.127, having shed 1.6% over the past month.

“Diversification away from the dollar is a growing trend,” JPMorgan analysts said in a Sept. 4 note, “but we believe the factors supporting dollar dominance remain well-entrenched and structural in nature.”

The dollar’s role in global finance and its contribution to economic and financial stability are supported by deep and liquid capital markets, the rule of law and predictable legal systems, a commitment to a floating exchange rate regime, and a well-functioning financial system that ensures US dollar liquidity and institutional transparency, the bank added.

Moreover, the private sector’s genuine confidence in the dollar as a store of value appears unquestionable, and the dollar remains the most widely used currency by many measures.

As JPMorgan put it, “we are witnessing greater diversification and significant changes in cross-border transactions as a result of sanctions against Russia, China’s efforts to strengthen the use of the RMB, and geoeconomic fragmentation.”

The bank added that a more vital, yet underestimated risk is the growing emphasis on payment autonomy and the desire to develop alternative financial systems and payment mechanisms that are not dependent on the US dollar.

“The risk of de-dollarization seems exaggerated, but cross-border flows are undergoing dramatic transformations within trading blocs and commodity markets, and an alternative financial architecture for global payments is becoming increasingly important,” JPMorgan said.