Most analysts suppose that the US dollar is extremely overvalued at the moment. Moreover, economists at BNY Mellon said that the greenback is the most overvalued currency in G10. Its long-lived rally has finally come to an end.
Until recently, the US currency was showing an unprecedented rise without any significant reason. Such a groundless surge is usually short-lived. That is why economists think that the greenback has halted its major rally in the last six months. The price of the US dollar dropped by almost 3% that is more than half of its gains logged during the last weeks of September. Investors see a gloomy future of the greenback and a massive sell-off. The latest data provided by the Commodity Futures Trading Commission (CFTC) also proved the negative sentiment. The fact is that the position of the US dollar index futures is the most bearish since November 2017. “All other G10 currencies have room to allow their own currencies to appreciate by as much as 5-7% on a trade-weighted basis and still be within reasonable valuation territory,” BNY Mellon noted. Economists also emphasize that the greenback has a 6.5% overvaluation.
