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 US dollar will depreciate by 2026 due to the Fed's continued rate cuts. Expectations from Wall Street banks are shaped by the adverse effects of trade wars.

Market Disruption and Dollar Stability

Due to President Donald Trump's trade policies, the dollar experienced its biggest decline since the early 1970s. However, stability has been achieved in the dollar over the past six months. Now strategists believe that the continued easing of the US Federal Reserve's (Fed) monetary policy, coupled with other central banks either holding 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 predict a significant depreciation of the dollar by 3% against major currencies. For example, 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 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 will keep interest rates steady, while the Bank of Japan may opt to increase them.

Goldman Sachs' Views

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