Deutsche Bank Warns of Prolonged US Dollar Decline

Deutsche Bank Warns of Prolonged US Dollar Decline

In Summary

  • Deutsche Bank warns of major long-term US dollar decline
  • Shifts in trade policy, geopolitical leadership cited as drivers
  • Dollar hits a three-year low; down 8% year-to-date
  • Euro forecasted to rise to 1.30 against dollar by decade’s end


Catenaa, Monday, April 28, 2025-Deutsche Bank strategists warned last Thursday that the US dollar is poised for a major long-term decline, citing lasting reputational damage to the United States and shifting global dynamics. 

George Saravelos and Tim Baker said preconditions for a major dollar downtrend are now in place, driven by the largest shift in US trade policy in a century and a reassessment of US geopolitical leadership unseen since World War II. 

In a research note, they pointed to growing concerns over the twin deficits and a weakening desire among global investors to finance US debt. The strategists also flagged a collapsing correlation between the dollar and equities, eroding the greenback’s status as a safe-haven asset. 

The ICE US Dollar Index dropped 0.6% Thursday to a three-year low of 99.27, pushing its year-to-date loss to 8%. The strategists forecast the euro will climb toward purchasing-power parity of 1.30 against the dollar by decade’s end, a level not seen since 2014. 

Investors, meanwhile, showed optimism in equity markets, betting that President Donald Trump might ease trade tensions to support financial stability. Stocks rose for a third straight session, while US Treasurys attracted strong demand. 

Treasury Secretary Scott Bessent said this week that a comprehensive trade deal with China may still be years away, adding to the uncertainty clouding the dollar’s outlook. 

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