Economists at Crédit Agricole have assessed the USD’s outlook and see limited scope for further upside as a lot of positives seem to be in the price.

The USD Is still smiling

"The USD outlook in the near-term could continue to follow the logic of the so-called ‘USD smile’ – the currency can benefit from its status as a safe haven during bouts of risk aversion while attracting inflows from carry investors during periods of recovering risk appetite.” 

“A drain of excess USD liquidity into year-end and Q122 can further give the currency a boost. That said, a lot of positives seem to be in the price of the overbought and overvalued USD.”

“The biggest losers can be the currencies of commodity importers and manufacturing exporters with relatively dovish central banks like the EUR, CHF and JPY. The EUR could further struggle as the French presidential elections come into view in Q122. That being said, we further note that the EUR and JPY are looking very undervalued already.”