Deutsche bank warns of a Dolk bearish trend in the coming years which will take the American currency to its weakest level in more than a decade in front of the euro.
The George Saravelos and Tim Baker strategists said that the negative impact of US tariff American assets and drag the dollar down.
The dollar fell to its minimum in 16 months earlier this weeksince the growing uncertainty about American politics generated doubts about its status as world reserve currency. The Bloomberg Dollar Spot index has fallen almost 4 percent in April, on the way to its worst month in more than two years.
“The conditions for the beginning of An important bearish trend of the dollar“, Wrote Deutsche Bank Research strategists in a note.” Given the historical developments of recent months, our forecasts for the EUR/USD anticipate that the dollar will enter a prolonged bearish cycle. “
The dollar falls … but the euro will rebound in 2027
The bank now provides that the euro It will rise to $ 1.30 by the end of 2027a last -time level in 2014 and well above the median forecasts of a Bloomberg survey of $ 1.15.
Deutsche Bank also foresees that Yen will rise to 115 per dollar, its highest level since 2022. This is compared with the previous bank forecasts of 1.15 and 125 dollars per dollar, respectively, just over a month ago.
-He Euro will benefit from safe refuge flows and of the largest investment of reservations in Europe, according to strategists. The common currency has risen more than 5 percent this month, after exceeding $ 1.15 this week.
By the end of 2027, the bank provides a drop in the dollar against other currencies, and provides that the pound reaches $ 1.45, a level not seen since 2016. A dollar is expected to 1.25 Canadian dollars, the lowest level since mid -2022.
Saravelos and Baker stated that the commercial policies of US President Donald Trump are reducing the interest of foreign investors in financing the country’s twin deficits.
This is causing a gradual divestment of US assets, which have increased in recent years, and is encouraging other countries to increase fiscal expenditure to boost internal growth and consumption.
That means that American exceptionalism has already begun to erode, they said. And as the market continues to move away from the dollar, the extreme uncertainty and the rapid evolution of political norms would keep the risk of market dislocations and ruptures of regimes.
Deutsche’s vision coincides with the perspective sustained by Kamakshya Trivedi, head of the global currency strategy, rates and emerging markets in Goldman Sachs, who said in an interview with Bloomberg TV earlier this week that the weakness of the dollar “had come to stay.”
