The US dollar already came into this year overvalued. Despite this, it has rallied a further 13% year-to-date to a 20-year high. When will the US dollar peak? More confidence around global growth is needed, Gabriela Santos, Global Market Strategist at JP Morgan, reports.

USD unlikely to peak in the very short-term

“In the short-term, the dollar peak may be delayed as investors still wrestle with global recession fears, keeping volatility elevated across assets and dragging on international equity returns. However, in the time frame of the next few quarters, investor sentiment about global growth has already gotten so depressed that ‘less bad’ news can fuel a turnaround in foreign currencies.”

“As gravity takes its toll on the US dollar again, market volatility can decline and international equity returns can receive a boost.”