Dollar Predictions for 2026 from Deutsche Bank and Goldman Sachs

Analysts Discuss the Future of the Dollar

Deutsche Bank and Goldman Sachs Group forecast that the U.S. dollar will lose value by 2026 due to the Fed's continued interest rate cuts. The expectations of Wall Street banks are shaped by the negative effects of trade wars.

Market Turbulence and Dollar Stability

Due to President Donald Trump’s trade policies, the dollar experienced its biggest drop since the early 1970s. However, in the last six months, there has been a stability in the dollar. Now strategists believe that the continued easing of the U.S. Federal Reserve's (Fed) monetary policy and other central banks either keeping interest rates steady or raising them will trigger weakness in the dollar.

Interest Rate Differentials and Dollar Expectations

Analysts from more than six major investment banks foresee a significant 3% depreciation of the dollar against major currencies. For instance, expectations are increasing that it will lose value against the yen, euro, and pound. According to Bloomberg Dollar Spot Index data, this decline in the dollar is expected to continue until 2026.

Market Movements and Future Expectations

Market players anticipate that the Fed will implement two quarter-point interest rate cuts next year. Additionally, it is noted that if Trump replaces Jerome Powell with another figure, the White House may demand further interest rate cuts. On the other hand, the European Central Bank will keep interest rates steady, while the Bank of Japan may pursue hikes.

Goldman Sachs' Opinions

Goldman Sachs analysts express that an optimistic outlook for G-10 currencies is beginning to be priced in. Analysts emphasize that the dollar tends to depreciate when "the rest of the world is in good shape."