Wells Fargo has updated its currency market forecasts, expecting a gradual decline in the value of the US dollar over the medium term compared to previous expectations. The bank’s forecasts indicate a moderate decline in the value of the dollar through most of 2025.
This forecast is based on an expected slowdown in economic growth in the United States and a prolonged phase of monetary policy easing by the Federal Reserve.
The report noted that some currencies, including the yen and the Australian dollar, could outperform the US dollar next year. Wells Fargo analysts believe these currencies could benefit if global financial conditions remain favorable.
The bank noted that this environment would also support currencies in emerging markets, which are typically more sensitive to risk perceptions.
Wells Fargo’s analysis also pointed to political and policy developments as potential risk factors. The bank cited scenarios that could emerge from the U.S. election, such as more expansionary fiscal policies and higher tariffs.
If such events occur, they could lead to a scenario in which the US dollar remains stronger for longer than currently expected by analysts at Wells Fargo.
Investors and policymakers watch central bank currency forecasts closely because they provide insights into how major currencies will perform against the U.S. dollar. The strength or weakness of the dollar has major implications for international trade, investment flows, and the pricing of commodities and other assets.
Finally, while Wells Fargo continues to expect the US dollar to decline moderately over the next few years, the bank has revised its forecast to reflect a slower pace of decline.
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