Analysts at Bank of America have revised their long-term forecasts for the US dollar, now anticipating stronger performance through the end of 2025. This outlook revision follows the US election results, which prompted a shift in consensus among currency forecasters.
Previously bearish on the US Dollar for the remainder of 2024, the consensus has now shifted towards a more bullish stance.
The median consensus forecast for the end of 2025 now sees only a modest rise to 1.05, contrasting with the 12-month EUR/USD futures average of 1.0679 seen during from last month.
Likewise, the consensus does not expect any significant movement in the, maintaining a stable forecast of 0.90 throughout 2025, while 12-month futures contracts to buy USD/CHF have traded around 0.8560.
This revised outlook follows speculative narratives that emerged ahead of the US election, suggesting that EUR/USD could reach parity in the event of a Republican victory.
Bank of America highlights historical patterns, such as the first Trump presidency, where the EUR/USD three-month risk reversal reached its widest level in February 2017 after Inauguration Day.
According to analysts, current market conditions and historical analogies suggest that the U.S. dollar rally has the potential to continue through 2025, and they believe it is worth considering hedges at current price levels to prepare for this scenario.
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