Barclays Research discusses the USD outlook in light of its latest modest forecasts revisions this week.
Specifically, Barclays has moderated the path of EUR/USD to flat in the next quarter and a low of 1.08 (previously 1.06) in Q2 20. Barclays has also decreased the JPY outperformance in its forecasts, with USD/JPY touching a low of 104 in Q1 20, rather than 102 previously.
"In response to better-than-expected developments at the G20 and in US data, we are moderating our forecasts for the USD in both directions: removing near-term depreciation and softening longer-term appreciation," Barclays adds.
"While we still expect the Fed to ease in the face of persistently low inflation, sizeable external risks and a moderation of US growth, we think the intensity of cuts and the risks to the path have moderated. An indefinite suspension of further US tariffs and technology sanctions on China – and likely retaliation – imply a modestly better growth path for both economies and for connected trading partners, reducing risks to the global economy," Barclays adds.