The RBC GAM currency team is calling for a weaker dollar in the longer term, and that's a view that's required a little bit of patience as the Federal Reserve hiked interest rates more than was generally expected last year. Now, most traders acknowledge the fact that the U.S. dollar likely peaked in September of last year. And even though the currency has fallen by 7% on the trade weighted basis since that time, there's some healthy skepticism about whether it can fall any further.

Now, these doubts are not particularly rooted in any particular point of U.S. optimism. We know that the greenback is extremely overvalued, and a lot of the fundamental factors that we look at continue to argue for the currency to fall further. Instead, it seems as though the dollar has been propped up by the fact that global economic conditions abroad have been less than inspiring.

And at this point, investors don't have any good reason to be pulling capital away from the U.S. and allocating their investments abroad. Now, as we formulate our outlook for the year ahead, we expect that the negative sentiment toward Europe and toward China will improve. And we know that the Fed is pretty close to the end of their rate-hiking campaign.

The lessening of these two short-term positives means that we're likely to see the greenback continue to weaken from here on more longer-term and fundamental drivers of exchange rates. In an environment where the U.S. dollar weakens, we'd expect most other currencies to benefit. And indeed, our forecasts are calling for a stronger euro, Canadian dollar, Japanese yen and British pound.