Investing.com – The US dollar fell against most major currencies in the wake of the Federal Reserve’s dovish shift, and there are more declines to come, according to Capital Economics, with a Trump win being the likely trump card.
With the US currency approaching the bottom of its post-2022 range, “we feel that a period of near-term consolidation is more likely than more sharp declines,” analysts at Capital Economics said in a September 26 note.
However, “we still expect the dollar to weaken slightly further over the course of 2025 as short-term interest rates decline further and risk sentiment remains strong amid the global recovery and a stock market bubble driven by AI hope,” Capital said. Economics added.
This central scenario depends on the continuity of politics in the United States.
“If former President Donald Trump is elected, we expect the dollar to rise, at least in the short term, in anticipation of higher US tariffs and interest rates.”
Overall, Capital Economics expects this year to end a little stronger, before falling to around 98 by the end of 2025.
At 08:35 EDT (12:35 GMT), the dollar index, which tracks the US currency against a basket of six other currencies, fell 0.1% to 100.489.