Bank of America analysts revised their long-term forecasts for the US dollar, now expecting a 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.
Previously bearish on the US dollar for the rest of 2024, the consensus has now shifted to a more optimistic position.
The mid-year consensus forecast for 2025 now predicts only a modest increase in the to 1.05, compared to the EUR/USD 12-month forward average of 1.0679 seen over last month.
Similarly, the consensus does not expect a big move in the , maintaining a stable forecast of 0.90 throughout 2025, but the 12 months ahead to buy USD/CHF has been trading around 0.8560.
This outlook review follows speculative reports that appeared before the US election, suggesting that the EUR/USD could reach parity in the event of a Republican victory.
Bank of America points to historical patterns, such as the first Trump presidency, where the three-month EUR/USD risk reversal reached its widest point in February 2017 after Inauguration Day.
According to the analysts, the current market conditions and historical analogues suggest that the rally of the US dollar has the potential to continue until 2025, and they believe that it is worth considering hedges at the levels current prices to prepare for this situation.
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