Scope for further US dollar upside is more modest now - BTMU

Analysts at Bank of Tokyo-Mitsubishi explained that the valuation is more of a dampener on further US dollar strength.

Key Quotes:

"The US dollar is already significantly overvalued having strengthened sharply over the last six years. The Fed’s trade-weighted US dollar index against the other major currencies has already strengthened by almost 40% over this period and is now close to two standard deviations above its long-term trend dating back to the early 1970’s."

"The increasingly stretched scale of overvaluation could be acting as more a restraint on the US dollar. In simple terms, the hurdle for further US dollar strength now appears higher. Please see our latest G10 FX valuation update (click here) for further details."