Barclays Research maintains a core bullish bias on the USD. Barclays targets EUR/USD at 1.16 by end of Q2, and 1.14 by year-end.
"The USD remains king of the beasts...The dollar offers the best of both worlds: G10-leading growth that bests all but a handful of EM, and a recent track record as the best-performing safe haven. On its eponymous smile, it seems to simultaneous reside at both ends at once, like Schrödinger’s cat in two simultaneous states, as markets bounce between radical post-COVID uncertainty and ebullience on surging US data. Amid a bond market selloff that challenges the relative safety of duration, this gives the USD an attraction in global portfolios that is unmatched as a hedge on equity risk," Barclays notes.
"Yet, after years of appreciation, the USD remains overvalued, although down from last year’s risk-driven surge. Hence, we expect the dollar’s Schrödinger’s cat grin to keep it buoyant at elevated levels, but not lead to significant appreciation," Barclays adds.