Investing.com – The US dollar has been in robust demand this week, with the US dollar’s recent streak of weakness ending. However, UBS warns against taking a long position against the dollar in the future.

At 08:05 ET (12:05 GMT), the Dollar Index, which tracks the dollar against a basket of six other currencies, was trading 0.1% lower at 101.642, just off the previous session’s six-week high.

The index rose nearly 1.5% this week, the highest since April.

“The US dollar regained some lost territory this week due to several factors: geopolitical risks led to a flight to safety, some US labor market data ahead of the publication of the extremely important non-farm payrolls and unemployment report were slightly better and lower than expected inflation in Europe has led markets to anticipate a 25 basis point cut by the European Central Bank in October,” UBS analysts said in an October 3 note.

“If this downward trend extends to the United States, the September inflation print could be very close to 2%.”

The Swiss bank says this is not a base case scenario, but cannot rule it out.

As mixed labor market data has clouded the picture in recent months, we believe a stronger decline in inflation could open the door to another 50 basis point rate cut by the Federal Reserve in November, UBS said.

“We continue to see broad dollar weakness in the coming months and advise clients to take advantage of the current period of strong dollar to limit their exposure,” the Swiss bank said. “With this in mind, DXY should eventually fall below 100.”