Dollar Predictions for 2026 from Deutsche Bank and Goldman Sachs

Analysts Discuss the Future of the Dollar

Deutsche Bank and Goldman Sachs Group predict that the USD will depreciate 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 Disruption and Dollar Stability

Due to President Donald Trump's trade policies, the dollar experienced its largest decline since the early 1970s. However, stability has been achieved in the dollar over the past six months. Now, strategists believe that the Federal Reserve continuing to ease monetary policy and other central banks either keeping interest rates steady or increasing 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% weakening of the dollar against major currencies. For instance, expectations are growing 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 participants anticipate that the Fed will implement two quarter-point rate cuts next year. Additionally, it is noted that if Trump appoints someone else to replace Jerome Powell, the White House may demand further rate cuts. On the other hand, the European Central Bank is expected to keep rates steady, while the Bank of Japan may opt for increases.

Goldman Sachs Views

Goldman Sachs analysts state that an optimistic outlook for G-10 currencies is beginning to be priced in. Analysts emphasize that the dollar tends to lose value when "the rest of the world is doing well."