Despite Trump's repeated public statements expressing a desire for a weaker dollar to better support domestic industries, Wall Street analysts generally believe that the recent strong trend of the dollar will continue in the future and may even reach parity with the euro. The general market consensus is that Trump's expectation of boosting the economy by lowering the dollar's exchange rate may not be realized, especially under the influence of multiple economic factors behind his policies.
A survey by the Financial Times has shown that several international banks, including Goldman Sachs, Morgan Stanley, and UBS, predict that the dollar will continue to strengthen until 2025. Deutsche Bank is more aggressive, expecting the euro-dollar exchange rate to reach a parity level of 1:1 in the coming years. Currently, the euro-dollar exchange rate has fallen from $1.11 in early October to $1.05, with the dollar rising by about 6.1% in just a few months, marking the best quarterly performance since the Federal Reserve's rate hike in 2022.
Although Trump has frequently publicly expressed the pressure that a strong dollar brings to the US economy, particularly the burden it places on export companies, the market remains skeptical about Trump's ability to revive manufacturing by weakening the dollar. In an interview with Bloomberg Businessweek in July, Trump pointed out that a strong dollar has placed a significant burden on American companies, especially those trying to sell products overseas, as a strong dollar makes their goods more expensive and less competitive for export.
However, analysts believe that Trump's tax cut plans and other economic stimulus policies are likely to further intensify domestic inflation, prompting the Federal Reserve to maintain higher interest rate policies, thereby attracting more foreign capital into the US financial markets and increasing dollar demand. While Trump's tax cuts and other economic stimulus measures may boost US economic growth in the short term, they could also push up interest rates and exacerbate the strong dollar scenario.
Therefore, although Trump has publicly stated his desire to stimulate American industry through dollar depreciation, Wall Street generally believes that, despite Trump's policies, the outcome is more likely to maintain or intensify the dollar's strength rather than achieving his desired weaker dollar goal.
