Barclays_FX_EM_Macro_Strategy_Quarterly_Outlook_Dollar_hedging_A_trend_or_a_fade

This document is intended for institutional investors and is not subject to all of theindependence and disclosure standards applicable to debt research reports prepared for retailinvestors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for itsown account and on a discretionary basis on behalf of certain clients. Such trading interestsmay be contrary to the recommendations offered in this report.Please see analyst certifications and important disclosures beginning on page 79 .FX & EM Macro Strategy Quarterly OutlookDollar hedging: A trend or a fade?We examine hedging flows and quantify the scope for EURupside, take stock of resilient US data and a moreexpansionary US fiscal policy, and assess the prospects forEM carry and fiscal risks in EMEA.FX & EM Macro Strategy Quarterly OverviewDollar hedging: A trend or a fade?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3As other dollar selling narratives become increasingly contradictory, expectations of dollarhedging flows have persisted. We develop an analytical framework around this theme. Hedgingflows could drive EUR/$ to 1.20 under certain conditions, but the risk reward is deterioratingprogressively.FX & EM Macro StrategyFX & EM Views for the Year Ahead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Please find our updated FX views and forecasts across G10 and EM currencies.FICC ResearchFX Strategy24 June 2025SIGNATUREThemistoklis Fiotakis+44 (0) 20 7773 2002themos.fiotakis@barclays.comBarclays, UKLefteris Farmakis+44 (0) 20 3555 6549lefteris.farmakis@barclays.comBarclays, UKAndrea Kiguel+1 212 526 8954andrea.kiguel@barclays.comBCI, USMitul Kotecha+ 65 6308 5439mitul.kotecha@barclays.comBarclays Bank, SingaporeMarek Raczko+44 (0) 20 3134 0089marek.raczko@barclays.comBarclays, UKShinichiro Kadota+81 3 4530 1374shinichiro.kadota2@barclays.comBSJL, JapanCompleted: 24-Jun-25, 02:33 GMT Released: 24-Jun-25, 04:00 GMTRestricted - ExternalFX & EM Macro StrategyForecast Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74G10 and EM forecasts.24 June 20252Barclays | FX & EM Macro Strategy Quarterly Outlook: Dollar hedging: A trend or a fade?FX & EM Macro Strategy Quarterly OverviewDollar hedging: A trend or a fade?As other dollar selling narratives become increasinglycontradictory, expectations of dollar hedging flows havepersisted. We develop an analytical framework around thistheme. Hedging flows could drive EUR/$ to 1.20 under certainconditions, but the risk reward is deteriorating progressively.EUR/$ hedging flow as the only persistent narrative: The reality has been much blander thanwhat tail risk expectations implied in April. US growth is resilient, risks from fiscal policy aremoderating, "sell US" flows have been unexceptional, and trade front-loading is smoothing theimpact of tariffs. More  recently, higher oil prices have boosted the USD against Asiancurrencies. Yet,