Dollar Predictions from Deutsche Bank and Goldman Sachs for 2026

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 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, in the past six months, stability has been achieved in the dollar. Now strategists believe that the U.S. Federal Reserve's (Fed) continued easing of monetary policy will trigger weakness in the dollar, as other central banks either keep interest rates stable or increase them.

Interest Rate Differentials and Dollar Expectations

Analysts from more than six major investment banks are predicting a significant 3% decline in the dollar against major currencies. For example, 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 forecast that the Fed will make two quarter-point interest rate cuts next year. Additionally, it is noted that if Trump appoints someone else in place of 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 go on a path of increases.

Goldman Sachs' Views

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