Barclays: The Dollar May Decline Further, but Strong U.S. Economic Data Will Limit the Downside

Barclays analysts stated in a report that the dollar may decline further in the near term, but the drop might be limited given the relative resilience of the U.S. economy. Volatility in the bond market is creating an unfavorable environment for the dollar, and U.S. trade policy missteps, shifts in rhetoric around tariffs, or weak data could further weaken the dollar. However, analysts do not expect a significant depreciation of the dollar. They noted that the recent de-escalation of tariffs suggests that the economic damage to the U.S. might be less than feared. Aside from short-term concerns about the U.S. budget deficit, Trump's fiscal easing plan is more likely to strengthen the dollar than if he opted for fiscal tightening.