Deutsche Bank has warned that the US dollar will experience a structural decline in the coming years, which will push the exchange rate of the US dollar against the euro to its lowest level in more than a decade.
Strategists George Saravelos and Tim Baker said that the negative impact of US tariffs, along with Germany’s fiscal stimulus and a reassessment of Washington’s role on the world stage, will lead investors to sell off US assets and drag the dollar lower.
Earlier this week, the US dollar hit a 16-month low as policy uncertainty in the United States intensified, raising questions about its status as the world’s reserve currency. The Bloomberg Dollar Spot Index fell nearly 4% in April, on track for its biggest monthly decline in more than two years.
Strategists at Deutsche Bank Research wrote in a report: “The prerequisites for a significant decline in the US dollar are now in place. Given the historical trends over the past few months, our forecast for the euro/dollar now indicates that the US dollar will enter a prolonged downward cycle.”
The bank currently predicts that the euro will rise to $1.30 against the dollar by the end of 2027, a level last seen in 2014 and well above the $1.15 median forecast in a Bloomberg survey. Deutsche Bank also expects the yen to rise to 115 against the dollar, the highest level since 2022. In contrast, the bank had predicted a euro-dollar rate of $1.15 and a yen-dollar rate of 125 more than a month ago.
Strategists say the euro will benefit from “safe-haven capital inflows” and reserve management institutions’ efforts to increase their investment in Europe. The euro has risen by more than 5% this month and broke through $1.15 this week. Central banks expect the dollar to fall sharply against other currencies by the end of 2027, with the pound rising to $1.45 against the dollar, a new high since 2016. The central bank predicts that the exchange rate of 1 US dollar to 1.25 Canadian dollars will reach its lowest level since mid-2022.
Deutsche Bank’s view is in line with that of Kamakshya Trivedi, the global head of foreign exchange, rates and emerging markets strategy at Goldman Sachs, who said in a Bloomberg Television interview earlier this week that the weakness of the US dollar “will persist”.
Technical analysis:
Gold: Yesterday, the price broke through the blue zone alerted by our plugin and rose to above 3340. However, after entering the offshore market, the price swept through the liquidity near 3300 and then reversed and rose. For today, we continue to retain the low buy strategy after sweeping the liquidity. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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The Nasdaq: After the price broke through the blue momentum zone alerted by our plugin, it saw another surge of 600 basis points. For today, we should continue to follow the strategy of buying on pullbacks. At the same time, closely monitor the situation after the North American market opens. If the price sweeps through the 19,000 – 19,200 range and then rebounds after the liquidity flush, it could be a good opportunity. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg and note “666” in the message.
Crude oil: As Trump has postponed the full reciprocal tariffs for 90 days, the pressure on oil prices from recession concerns has been greatly alleviated. After the price dropped to around 61.50 overnight, it has been in a consolidation pattern. Pay close attention to the price breaking above the sideways range during the day and look for opportunities to buy. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and write “666” in the message.
Today’s key economic data and events to focus on:
14:00 UK March seasonally adjusted retail sales (month-on-month rate)
20:30 Canadian retail sales for February (month-on-month rate)
22:00 The final reading of the University of Michigan’s Consumer Sentiment Index for April in the United States
