BofA sees stronger greenback in 2025, euro and franc to lag

Financial institution of America analysts revised their long-term forecasts for the U.S. greenback, now anticipating a stronger efficiency by way of the top of 2025. The revised outlook comes after the U.S. election outcomes, which prompted a shift in consensus amongst foreign money forecasters.

Beforehand bearish on the U.S. greenback for the rest of 2024, the consensus has now shifted to a extra bullish stance.

The year-end median consensus forecast for 2025 now predicts solely a modest rise within the EUR/USD to 1.05, contrasting with the 12-month EUR/USD forwards common of 1.0679 noticed over the previous month.

Equally, the consensus doesn’t count on vital motion within the USD/CHF, sustaining a gradual forecast of 0.90 all through 2025, whereas the 12-month forwards to purchase USD/CHF have been buying and selling round 0.8560.

This outlook revision follows speculative narratives that emerged earlier than the U.S. election, suggesting the EUR/USD may attain parity within the occasion of a Republican victory.

Financial institution of America factors to historic patterns, akin to the primary Trump presidency, the place the three-month EUR/USD threat reversal reached its widest stage in February 2017 following Inauguration Day.

In keeping with the analysts, the present market situations and historic analogs recommend that the U.S. greenback rally has potential to proceed into 2025, and so they imagine it’s price contemplating hedges on the present worth ranges to arrange for this situation.

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