LONDON (Reuters) - Rises in U.S. interest rates will probably prop the dollar up over the next 18 months, but its multi-year run higher since 2012 looks to be over, strategists from British bank Barclays (LON:BARC) said in a note on Thursday.
The swifter recovery of U.S. banks and the U.S. economy after the global financial crisis of 2008 have funded a stronger dollar in recent years, firstly against the yen
But those moves have long been stalling against the euro
"We believe the USD super-cycle of the past five years is over: the cyclical divergence that helped the dollar in these years has likely peaked, not only because of the European recovery, but also because the U.S. business cycle is more advanced than in Europe," Barclays said in an updated global outlook dated June 22.
"Valuations also suggest downside risks over the medium term, though for the immediate future, we expect the dollar to move sideways against major currencies."
The bank accompanied the report with new currency forecasts which called for the dollar to weaken by 2-3 percent against China's yuan over the next year
It forecast the U.S. currency would strengthen to $1.06 per euro at the start of next year, before weakening back to $1.12, close to current levels.