Bank of America analysts have revised their long-term forecasts for the US dollar and now anticipate stronger performance through the end of 2025. The revised outlook comes after the US election results, which prompted a shift in consensus among currency forecasters.
The consensus was previously bearish on the US dollar for the remainder of 2024, but has now shifted to a more bullish view.
The year-end 2025 median consensus forecast now predicts only a modest rise in the price to 1.05, which contrasts with the 12-month EUR/USD average of 1.0679 seen last month.
Similarly, the consensus expects no significant move in the , maintaining a steady forecast of 0.90 for all of 2025, while the 12-month forwards to buy USD/CHF were trading around 0.8560.
This outlook revision follows speculative stories that emerged before the US elections suggesting that the EUR/USD could reach parity in the event of a Republican victory.
Bank of America points to historical patterns, such as during Trump’s first presidency, where the quarterly EUR/USD risk reversal reached its widest level in February 2017, after Inauguration Day.
According to the analysts, current market conditions and historical analogues suggest that the US dollar rally has potential to continue into 2025, and they believe it is worth considering hedges at current price levels to focus on this scenario to prepare.
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