Barclays says the USD is overvalued circa 5 to 10%, but there are still supportive factors. Sees EUR/USD higher.

Via a Barclays note, analysts are looking for a small decline in the US dollar over the year ahead, citing “our views of a stable backdrop for risk and commodities alongside moderate USD overvaluation.” 

But says there are topside risks for the dollar, pointing to potential persistence in ongoing disruptions:

  • China slowdown
  • supply bottlenecks
  • the energy crunch

which could all provide a tailwind to ‘safe haven dollar demand’.

On central banks, sees markets repricing the risks for other central banks catching up towards Fed hawkishness. 

Forecasts for EUR/USD, the analysts ‘see room for modest appreciation of the euro driven by relative monetary policy expectations”

  • Q4 2021 1.15
  • Q1 2022 1.16
  • Q2 2022 1.18
  • Q3 2022 1.19
  • Q4 2022 1.19

EUR/USD weekly candles:

Via a Barclays note, analysts are looking for a small decline in the US dollar over the year ahead, citing "our views of a stable backdrop for risk and commodities alongside moderate USD overvaluation." 

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