Investing.com – The dollar is now in overstretched territory after the latest Trump-fueled rally, UBS warned on Monday.

“We caution that dollar valuation appears overvalued at current levels,” UBS analysts noted in a recent report.

The warning comes after the DXY index rose about 0.5% to over 106 points on Monday following President-elect Donald Trump’s threat to impose 100% import tariffs on BRICS countries unless they commit not to develop a single currency or supporting alternatives to the US dollar in international trade.

“The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is over,” Trump wrote in a social media post on Sunday.

The Indian rupee and South African rand fell slightly.

The dollar’s reign as king of the currency playground is likely to continue despite growing de-dollarization efforts.

Analysts say the US dollar dominates financial markets and international trade and is used in more than 47% of global payments. The dollar remains on one side of 88% of all transactions, making it the world’s dominant currency in terms of liquidity.

“While tensions in the global financial system resulting from the dollar’s dominance will persist, we do not see anything that would credibly threaten its supremacy,” analysts said.

Well, the future of the Royal Dollar continues to be vivid, and in the near term, analysts have advised investors to take advantage of periods of sturdy Dollar to reduce their exposure to the US Dollar.