The dollar will see weakness going into the U.S. elections in November, predicted Macquarie's foreign exchange strategist, who says he is bearish on the currency.
"We are quite bearish on the U.S. dollar, not massively so ... but we do see scope for broad-based U.S. dollar weakness into the U.S. presidential elections in November," said Gareth Berry, who is also Macquarie Group's managing director.
A recent CNBC/Change Research poll found that former Vice President Joe Biden is leading over President Donald Trump in six swing states. Voters gave Trump low marks on his handling of the coronavirus. Across the six states, a majority of voters approve of how Trump is handling only one issue: the stock market.
Berry told CNBC on Friday: "The U.S. dollar was meant to be a safe-haven currency ... But we have had episodes in the past where the dollar has weakened around political events in the U.S. ... It's rare but happens from time to time."
Berry listed two occasions when that happened — during the 2011 debt ceiling crisis in the U.S., as well as the 2016 election.
In 2011, Congress could not agree on a deal to raise the debt ceiling until it seemed to become immediately necessary. That led Standard & Poor's to downgrade the credit rating of the United States for the first time, and generated considerable market volatility.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was around 96.250 during Friday afternoon Asian trading hours, declining from levels above 96.4 earlier in the week.
The Japanese yen as well as the euro could serve as key alternatives to the dollar, Berry said, adding that he sees the yen strengthening to levels of 102 against the dollar by November. The yen was last trading at 107.23 per dollar on Friday afternoon.
The downside to the yen story is that the pension fund industry in Japan has been diversifying out of the yen "quite aggressively" into other currencies, leading to a "tide of outflows" of the yen, he said.
Still, Berry said: "But I think there's still enough mileage in this U.S. political story, to allow dollar-yen to fall quite sharply into November, and that would be, along with the euro, one of our top picks as dollar alternatives over the next few months."
— CNBC's Jacob Pramuk contributed to this report.