Energy premium temporarily supports the dollar; Barclays is pessimistic about the long-term exchange rate trend

Golden Ten Data reported on March 30 that Barclays believes the US dollar will remain strong, supported by high recent energy prices. However, the bank expects a broader weakening of the US dollar once Middle East tensions ease over the coming months. According to its estimates, a 10% increase in oil prices drives the US dollar up by 0.5% to 1.0%. Nevertheless, Barclays stated: "Based on our latest forecasts, geopolitical stabilization in the next three months, the policy focus shifting to the domestic US government agenda, and the new leadership of the Federal Reserve may point to some degree of short-term weakness." Barclays predicts that the euro/US dollar exchange rate will reach 1.18 in the next quarter. The bank added that this week the market’s focus is on the Job Openings and Labor Turnover Survey, retail sales data, the Institute for Supply Management manufacturing index, and the latest March employment report.