Dollar Forecasts for 2026 from 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 depreciate by 2026 due to the continued lowering of interest rates by the Fed. 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 stability in the dollar over the past six months. Now strategists believe that as the U.S. Federal Reserve continues to loosen its monetary policy and other central banks either maintain or raise interest rates, this will trigger weakness in the dollar.

Interest Rate Differentials and Dollar Expectations

Analysts from more than six major investment banks foresee a significant depreciation of the dollar by 3% against major currencies. For example, 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 foresee that the Fed will make a two-quarter-point interest rate cut next year. Additionally, it is reported that if Trump appoints someone other than Jerome Powell, the White House may demand further interest rate cuts. On the other hand, the European Central Bank is expected to keep interest rates stable, 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 depreciate when "the rest of the world is doing well."