Investing.com – The U.S. dollar has weakened against most major currencies following the Federal Reserve’s dovish turn, and according to Capital Economics, further declines are on the horizon, with a Trump win a potential wild card.
With the dollar near the lower end of the range after 2022, “in our view, a period of consolidation is more likely in the near term than further sharp declines,” Capital Economics analysts said in a Sept. 26 note.
That said, “we still expect the dollar to weaken further over the course of 2025 as short-term interest rates continue to fall and risk sentiment persists amid a global economic recovery and a stock market bubble fueled by AI hopes,” Capital Added Economics.
This main scenario is based on US policy continuity.
“If former President Donald Trump is elected, we would expect the dollar to appreciate, at least in the short term, in anticipation of higher U.S. tariffs and interest rates,” he added.
All told, Capital Economics forecasts this year will finish slightly stronger before falling to around 98 by the end of 2025.
At 08:35 ET (12:35 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 100.489.
