Wells Fargo analysts predict a weaker US dollar for the rest of 2025, but a rebound in 2026. Their outlook hinges on several key factors.
Interest Rate Cuts and a Weaker Dollar
The analysts expect the Federal Reserve to cut interest rates by a total of 75 basis points this year, with 25-point cuts anticipated in September, October, and December. This, combined with stronger international economic growth, will likely push the dollar down against most major currencies. They believe this trend will continue until the end of 2025.
A Shift in Economic Momentum
While Wells Fargo predicts US GDP growth in the second half of 2025, they also anticipate a loss of the US economy’s current competitive edge. As global economies strengthen, foreign currencies are expected to gain ground in the coming months.
The Dollar’s Comeback in 2026
However, the picture changes in 2026. The analysts foresee the Fed ending its rate-cutting cycle and holding rates steady. This, along with potential fiscal stimulus and reduced uncertainty surrounding US policies (like tariffs), is expected to make the dollar more attractive to investors, leading to capital inflows and a stronger currency.
Disclaimer: This information is for general knowledge and shouldn’t be considered investment advice. Always do your own research before making any investment decisions.
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