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EUR/USD spot rate at time of writing: 1.2164Bank transfer rate (indicative guide): 1.1740-1.1820FX specialist providers (indicative guide): 1.2076More information on FX specialist rates hereA secular downtrend in the Dollar makes buying the Euro and selling the Dollar a winning trade over coming months, say foreign exchange strategists at Crédit Agricole.

The strategy team at the France-based investment bank say the Dollar could emerge as one of the biggest losers from the global cyclical upturn that they expect to gather pace in 2021 and beyond.

"In particular, we expect that recovering global growth and trade will lead to increasing selling of USD by global corporates as they convert their growing exports proceeds into their home currencies," says Valentin Marinov, Head of G10 FX Strategy at Crédit Agricole in London.

The call comes amidst notable shift lower in the broader U.S. Dollar through the second half of 2020, a move that has culminated in December with a decisive break above 1.20 in the Euro-to-Dollar exchange rate (EUR/USD).

A further potential driver of Dollar weakness over coming months is a divestment in the world's de facto reserve currency over coming months by the major central banks.

A consensus view amongst financial analysts and economists for 2021 is that the world will emerge from the covid-19 crisis and a new growth phase in the global economy will begin.

Typically, safe-haven assets such as the Dollar tend to underperform peers as investors seek out assets that will likely yield greater returns.

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{wbamp-hide end}{wbamp-show start}{wbamp-show end}"We expect that both US and international investors will start diversifying from the USD-assets in their portfolios that they have amassed in recent years. In that, a more subdued US economic recovery and dovish Fed could further reduce the appeal of the USD as an investment currency," says Marinov.

Crédit Agricole join other analysts who say the Dollar also looks overvalued against most G10 currencies based on fundamental drivers, with the U.S. fiscal and trade deficits being two persistent headwinds.

"Global investors could thus start hedging against future depreciation of the currency and sell the USD forward – a development that is further supported by the steepness of the UST yield curve," says Marinov.

Turning to the Euro, Crédit Agricole see the Eurozone's single-currency benefiting from renewed purchases by Eurozone exporters as trade with the rest of the world picks up.

"The EUR could further benefit as global central banks are looking for liquid proxies for the USD as they look to diversify their growing FX reserves next year. Furthermore, the recently introduced EU recovery fund could start issuing high-quality, EUR-denominated debt in Q221 and attract foreign portfolio inflows at the expense of the USD," says Marinov.

Crédit Agricole models meanwhile show the Euro to be undervalued and this could encourage Eurozone investors to buy EUR/USD forward.

The investment bank are targeting a rally in EUR/USD to 1.25.

Research courtesy of FXWatcher.com.