We think that the US economy will continue to hold up and that the FOMC will, accordingly, ease by less than money markets currently discount, while many other central banks ease by more than discounted. As such, we expect a bit of rebound in the dollar over the next few months.
Fears of the dollar losing its special status imminently have faded since the April turmoil, but from a longer-term perspective, the greenback still looks somewhat overvalued. While that is justified given the continued outperformance of the US economy and stock market, over the medium term the dollar is likely to weaken.