Bank of America: Rate Cuts and High Inflation Will Weigh on the Dollar
According to a report by Alex Cohen of Bank of America, as the Federal Reserve appears poised to resume rate cuts despite persistently high inflation, the US dollar may weaken further. He noted that weaker-than-expected July nonfarm payroll data and concerns over the Fed’s independence have fueled market expectations for faster and more substantial rate cuts, even though inflation remains sticky. “Implementing potential rate cuts amid rising inflation creates fertile ground for dollar depreciation.” Bank of America expects the EUR/USD exchange rate to rise from its current level of 1.1620 to 1.20 by the end of the year, and further to 1.25 by the end of 2026.
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