Investing.com – The US dollar has weakened against most major currencies in the wake of the Federal Reserveβs dovish shift, and further falls lie ahead, according to Capital Economics, with a Trump win being the potential wild card.
With the greenback close to the bottom of its post-2022 range, βour sense is that in the near term a period of consolidation is more likely than further sharp falls,β said analysts at Capital Economics, in a note dated Sept. 26.
That said, βwe still expect the greenback to weaken a bit further over the course of 2025 as short-term interest rates fall further and risk sentiment remains strong amid a global recovery and a stock market bubble driven by βAIβ hope,β Capital Economics added.
This central scenario is predicated on policy continuity in the US.Β
βIf former president Donald Trump is elected, we would expect the dollar to appreciate, at least in the short term, in the expectation of higher tariffs and US interest rates,β
On balance, Capital Economics forecasts the dollar index to end this year a little stronger, before falling to around 98 by the end of 2025.
This post is originally published on INVESTING.
