On Thursday, BCA Research, a leading financial research firm, shared insights on the future of the US dollar, forecasting a potential decline by mid-2025.

Marko Papic, chief strategist and senior vice president at BCA Research, expressed a positive outlook for the dollar in the near term, especially as President Trump continues to promote tariffs and tax cuts. However, Papic predicts that the combination of high U.S. Treasury yields and a growing budget deficit will force the president to ease his aggressive fiscal policy, which could ultimately weaken the dollar.

The strategist noted that the U.S. government’s reliance on stimulative fiscal policy to shore up U.S. assets is unsustainable and expects the dollar to start falling as real government spending becomes evident. Despite robust employment reports that have recently boosted the dollar, Papic warns that this upward trend may not be sustainable in the face of fiscal policy challenges.

Papic believes that while the dollar could potentially return to its 2022 highs of 113 in the miniature term, Trump’s fiscal approach will face major headwinds over the next six months. The president’s ambitious spending plans are at odds with the budget deficit, which has already reached alarming levels.

The need to balance these expansionary fiscal ambitions with the demands of an impatient bond market will likely force Trump to scale back his promised tax cuts and trade tariffs. These policy changes, which markets were counting on to keep the dollar robust, could cause disappointment and contribute to the currency’s eventual decline.

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