The dollar spiked early in the pandemic, as global investors flocked to the security of assets denominated in greenbacks. Indeed, the dollar last year surpassed cycle highs set initially in 2001-2002 and then again in late 2016. But since peaking in April 2020, the greenback has drifted lower. Currently, on a real trade-weighted basis, the dollar is 8% above the average valuation over the past 20 years, but down from a 17% overvaluation at that April peak. The fully valued U.S. currency reflects several factors, but primarily the relative strength of the U.S. economy and global investor confidence in both the U.S. Federal Reserve and Department of Treasury as the world economy recovers from COVID-19. We anticipate a trading range around current levels for the greenback for the balance this year. That's because we think U.S. GDP will start to cool from the white-hot rates of 1H21. While Congress has been aggressive with fiscal stimulus, at some point, traders may become wary of the high level of U.S. debt relative to GDP. Lastly, the lofty current valuation of the greenback implies that other currencies -- and even gold or other commodities -- are possibly undervalued, and traders can be expected to bid up those values over time.