For the U.S. dollar, it looks like 2018 could be a tough year. Already, other currencies are gaining on the greenback, leading to opportunities opening up in Europe and emerging markets.

Read: Which currencies are gaining on the U.S. dollar

Increased optimism for global economic growth has prevented the U.S. dollar from taking advantage of tax reform and monetary tightening—at least in relative terms, says an FX forecast report from Desjardins.

“Moreover, increased optimism reduces demand for safe-haven securities, which often penalizes the U.S. dollar,” says the report.

Add in the recent U.S. government shutdown and advocacy from the U.S. Treasury Secretary for a weak currency, and depreciation for the U.S. dollar is the story so far this year. In contrast, the euro, pound and other European currencies have all increased in value.

The trend is for currency increases in emerging countries as well, as they take advantage of prevailing optimism, says the report. “The peso stands out, with an increase of nearly 5% since the beginning of the year,” says the report.

“The uncertainty surrounding NAFTA had less of an impact on the peso in January,” it adds.

Factors to watch

Desjardins expects the loonie to remain close to US$0.80 in the short term, but to appreciate “slightly” over the longer term.

“The effects of the next expected rate hikes in Canada should be limited by a similar change in interest rates in the United States, and by a slight drop in oil prices,” says the report. “Less uncertainty about NAFTA could help the loonie, but the opposite is also possible.”

Read: Expect lagging loonie in 2018

Meanwhile, the euro could be vulnerable to potential ECB monetary policy decisions. Economic improvements in Europe mean mention of a possible increase in bond-buying isn’t justifiable by the central bank. “The ECB could also further clarify when it will begin raising its key interest rate,” says the report.

For a detailed forecast for various currencies over the next two years, see Table 2 in the Desjardins report.

Also read: Get ready for more volatility