Credit Agricole CIB Research sees a limited scope for further USD downside from current levels.

"We doubt that the latest FX price action is the beginning of a downtrend for the USD, however. This is because of two considerations: (1) there is still a huge amount of uncertainty in the Middle East, suggesting that the conflict is far from resolved and delaying any normalisation of the flow of shipping through the Strait of Hormuz; and (2) a sustained decline of global energy prices remains a distant prospect and would suggest that the economies of energy importers like the Eurozone are still to experience the negative consequences from the energy supply shock triggered by the war," CACIB notes.

"This could mean that demand for the safe-haven USD may not weaken significantly further and could undermine the appeal of EUR-denominated assets for example," CACIB adds.