Deutsche Bank forecasts the U.S. dollar will weaken approximately 6% on a trade-weighted basis by the end of 2026, according to a new report released by the bank's foreign exchange strategists.

The bank's analysis indicates that the "Trump shock" to the dollar has concluded, but several fundamental factors still point to dollar weakness ahead. These include current valuations, balance-of-payments dynamics, and monetary-policy cycles, which collectively support a bearish outlook for the greenback.

Deutsche Bank specifically highlights the widening U.S. current account deficit as a key indicator supporting dollar depreciation, though strategists project this weakening will occur at a slower pace than previously anticipated for 2025.

In Europe, the bank forecasts EUR/USD will reach 1.25 by the end of 2026, with the euro gaining support from positive global growth, Europe's cyclical economic upswing, and the region's robust external financial position.

The report also notes that persistent inflation and continued weakness in the Japanese yen may force policymakers in Japan to tighten monetary policy despite initial reluctance, while the Chinese renminbi appears undervalued with low inflation creating conditions for real appreciation.

Sumber: Investing.com