Standard Chartered: The Dollar Ends Undervaluation and Returns to Historical Normal Relations

Steve Englander of Standard Chartered said in a note that the dollar appears to be returning to a normal relationship with historical drivers after skewing over the past year. Englander said the dollar was overvalued relative to normal drivers in late 2024 and early 2025, before turning undervalued in the second and early third quarters of 2025. He noted that the dollar is currently almost flat. Englander said the volatility reflected an initial expectation that tariffs would strengthen the dollar, followed by a period of high uncertainty after President Trump imposed sweeping tariffs in April, which eventually normalized later this year. Standard Chartered sees the decline in dollar undervaluation as positive for the currency.