Dollar Predictions for 2026 by Deutsche Bank and Goldman Sachs.

Analysts Discuss the Future of the Dollar

Deutsche Bank and Goldman Sachs Group predict that the U.S. dollar will lose value by 2026 due to the Fed continuing to lower interest rates. The expectations of Wall Street banks are shaped by the negative effects of trade wars.

Market Destruction and Dollar Stability

Due to President Donald Trump's trade policies, the dollar experienced its largest decline since the early 1970s. However, there has been some stability in the dollar over the past six months. Now strategists believe that the U.S. Federal Reserve's (Fed) continued easing of monetary policy and the decision of other central banks to either keep interest rates stable or increase them will trigger a weakness in the dollar.

Interest Rate Differentials and Dollar Expectations

Analysts from more than six major investment banks forecast a 3% decline of the dollar against major currencies. For instance, expectations are rising 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 appoints someone other than Jerome Powell, the White House may demand further rate cuts. On the other hand, the European Central Bank is expected to keep interest rates stable, while the Bank of Japan may pursue an increase.

Goldman Sachs' Views

Goldman Sachs analysts indicate that an optimistic outlook for G-10 currencies is starting to be priced in. They emphasize that the dollar tends to lose value "when the rest of the world is in good shape."