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The swifter recovery of U.S. banks and the U.S. economy after
the global financial crisis of 2008 have funded a stronger
dollar in recent years, firstly against the yen <JPY=> in 2012
and 2013 and then more broadly from the second half of 2014.
But those moves have long been stalling against the euro <EUR=>
and the yen, and a downturn in data - and faith in the economic
promises of U.S. President Donald Trump's administration - this
year have brought the index that measures the greenback's
broader strength down from 14-year peaks. <.DXY>
"We believe the USD super-cycle of the past five years is over:
the cyclical divergence that helped the dollar in these years
has likely peaked, not only because of the European recovery,
but also because the U.S. business cycle is more advanced than
in Europe," Barclays said in an updated global outlook dated
June 22.
"Valuations also suggest downside risks over the medium term,
though for the immediate future, we expect the dollar to move
sideways against major currencies."
The bank accompanied the report with new currency forecasts
which called for the dollar to weaken by 2-3 percent against
China's yuan over the next year <CNY=> and by almost 7 percent
against the yen.
It forecast the U.S. currency would strengthen to $1.06 per euro
at the start of next year, before weakening back to $1.12, close
to current levels.
(Writing by Patrick Graham, editing by Nigel Stephenson and
Angus MacSwan)
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