Barclays Capital expects the USD to remain under pressure this week versus the JPY, EUR, CHF and GBP, while sideways against EM and commodity currencies.
Barclays' rationale behind this view is that the USD will be driven mostly by expectations regarding an escalation of geopolitical risk, while Trump’s recent comments might skew risks to the downside.
"Related to the former, in a scenario in which geopolitical risks escalates, we believe that the USD could outperform high-beta currencies, but the opposite would be the case vis-à-vis safehaven currencies," Barclays adds.
In addition, Barclays argues that the recent comments from Trump regarding the strength of the USD might signal the reluctance of the new administration to implement policies that might strengthen it further, decreasing the prospects of a higher dollar in the months to come.
USD/JPY is trading circa 108.93, EUR/USD is trading circa 1.0639, USD/CHF is trading circa 1.0047, and GBP/USD is trading circa 1.2558 as of writing.
Source: Barclays ResearchOriginal Article
