GuShiio.com ① Morgan Stanley predicts that the US dollar will fall in 2025 due to the recurrence of the US dollar’s depreciation in the early days of Trump’s first term;
② Affected by factors such as Trump’s trade controversy and political turmoil in Europe, the US dollar index has risen for four consecutive months since October last year.
Cailian News, February 25 (Editor Zhao Hao)Top investment bank Morgan Stanley recently stated that the US dollar may fall in 2025 because the depreciation of the US dollar in the early days of Trump’s first term will once again threaten the currency.
Affected by factors such as Trump’s trade controversy and political turmoil in Europe, the US dollar index has risen for four consecutive months since October last year, and has declined this month. In January this year, the US dollar index once rose above the 110 mark, and the last time it reached this level dates back to November 2022.
At present, many people in the market believe that the US dollar has the ability to continue to rise or remain at its current level. Morgan Stanley strategists say that a month after Trump’s second term began, many of the catalysts that caused the dollar’s decline in 2017 have once again shrouded the currency or pushed it onto a similar path.
Markets show that the US dollar index fell by 9.85% in 2017, the worst performing year in the 11 years from 2004 to 2024, and fell by 14.66% in 2003. “Why did the dollar fall in 2017? Because trade policy, global growth and European politics have contributed.”
Monthly chart of the US dollar index
“We believe the dollar will fall this year for the same reasons as it fell in 2017,” Morgan Stanley strategists wrote. They said tariff policies were not as severe as many investors expected, which was one reason for the weakness of the dollar.
Trump had previously threatened to impose tariffs on Canada, Mexico and Colombia, but later proved that tariffs were more likely a negotiating tool. About 30% to 40% of investors surveyed by Morgan Stanley believe that “reciprocal tariffs” will not be implemented, but will only force the other party to make “geopolitical concessions.”
European politics is also a potential pressure on the dollar in the coming months. Morgan Stanley strategists said one focus is the consequences of the German election, and the possibility of an alliance between the CDU and the Social Democratic Party will boost the euro and suppress the dollar. During the day, the euro rebounded slightly against the US dollar, with the latest reading at 1.0481.
Analysts at Bank of America expect the euro to close at 1.10 against the dollar at the end of the year, as a lot of positive news for the dollar has been factored into currency movements. Goldman Sachs strategists also believe that the outlook for the dollar is similar to that in 2017.
