Investing.com – Citi strategists encouraged investors to “tactically buy the U.S. dollar dip” following Donald Trump’s election victory.

The bank expects the value of the dollar to continue to rise, particularly against the euro (EUR) and Nordic currencies (Scandies), citing the recent needy performance of these currencies.

Despite uncertainty about the House outcome, strategists note that the lack of ticket splitting may suggest that a “red wave” is more likely if Trump wins, the strategists wrote in a note.

They believe that currency markets will continue to focus on tariff-sensitive currencies as fiscal policy changes may take time to materialize. Market participants may also wait for confirmation of the House’s switch to Republicans before expecting broader changes in fiscal policy.

The Citi team expressed caution about taking a direct approach to USD growth, pointing out that the market is already quite long USD and expecting the Federal Reserve (Fed) to maintain a dovish stance at its upcoming meeting on Thursday.

The company notes that its strategy typically avoids momentum chasing, preferring to wait for a potential decline in the value of the USD after the Fed meeting to buy the currency.

In the report, strategists also pointed to downside potential in tariff-prone currencies such as (CNH), (TWD) and (THB), which are considered clear low positions.

In the case of G10 currencies, the euro is seen as an obvious candidate for sale due to its bilateral trade surplus with the US.

“This also applies to Scandinavia (NOK and SEK), which actually have a higher EUR beta,” noted strategists led by Daniel Tobon.

“NOK may also underperform in weaker oil under the Trump administration, although we note that NOK and oil correlations tend to be short-lived,” they added.

Meanwhile, SEK remains highly sensitive to the global production cycle, and strategists expect trade and tariff wars “will remain disruptive to the manufacturing recovery.”

Citi maintains that a full “red wave” in the US elections could justify a 5% appreciation of the US dollar. The bank’s analysis suggests there is still room for a further 3.4% decline before the impact of Trump’s policies is fully reflected in the currency pair.

The bank said it would be looking for a retest of the trend line at around 1.0790, where selling could be made, with tactical supports around 1.06-1.0630, but based on residual analysis it did not rule out a move towards 1.0350 -1.0450.