The recent resurgence of the "Trump trade" has resulted in the dollar gaining momentum, as Republican candidate Donald Trump gains traction in the presidential race. However, UBS analysts caution that while a Trump victory could lead to a temporary increase in the dollar's value, they do not believe he would have a positive long-term impact on the currency.

They recommend selling into stronger dollar rallies, as they anticipate limited upside for the greenback in the medium term. With the U.S. election approaching, polls indicate that Trump currently has a slight lead over Vice President Kamala Harris, which has contributed to the recent rally of the dollar. UBS predicts that the euro-dollar exchange rate will reach 1.16 by 2025, suggesting that the boost from the "Trump trades" may not last long.

In terms of other currencies, UBS highlights the South African rand and the Mexican peso as favorable options for medium-term carry, citing supportive government reforms and existing risk premiums for political instability, respectively.