“The US dollar is substantially overvalued according to different metrics including our own fundamental model estimates
• The Japanese yen and the euro are the most undervalued versus dollar • Cyclical drivers and FX hedging have mainly contributed to dollar weakness in 2025 • In our forecast horizon we expect the dollar to weaken further due to negative cyclical developments and more concerns on the structural factors. Since the start of the year, the dollar has declined by 13% in value relative to the euro, 4% versus the yen, and even 17% versus the Swedish krona. On a trade-weighted basis, the US dollar has declined by 6% in nominal terms and around 4% in real terms. The dollar’s decline raises questions on the current valuation of the dollar. Is it now undervalued, still overvalued, or is it trading close to where its fundamentals suggest it should be. In this publication we set out a number of arguments making the case that the dollar remains overvalued.”
Morten W. Langer
