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.
