Wall Street analysts predict that tough times lie in store for the US dollar. They admit even a collapse of the world’s main reserve currency! Wall Street financial firms have downgraded their outlooks on the greenback. Its potential decline is attributed to several factors, including a series of rate cuts, slowing economic growth, and the trade and tax policies pursued by US President Donald Trump.
Analysts at Morgan Stanley forecast that by mid-2026, the US dollar will weaken to the levels last seen during the COVID-19 pandemic. Experts at JPMorgan Chase & Co. share this pessimism toward the American currency. Economists at Goldman Sachs Group Inc. express the sentiment, suggesting that Washington’s efforts to seek alternative sources of revenue amid potential tariff issues will further weaken the US dollar.
Earlier this week, the dollar lost ground against major currencies amid escalating global trade tensions. The Bloomberg Dollar Spot Index fell by 0.5% and continued to slide, approaching its lowest level since July 2023.
In a note dated May 31, Morgan Stanley’s analysts warned about a slump of the greenback and a sharp steepening of yield curves. The bank expects the US Dollar Index (DXY) to plunge by approximately 9% in 2026, reaching about 91 points.
JPMorgan’s analysts share this view. Last week, they worsened their bearish outlook on the dollar, advising investors to shift their focus to the yen, euro, and Australian dollar instead. Morgan Stanley had previously defined the euro, yen, and Swiss franc as currencies likely to benefit from the dollar’s weakness.
Wall Street strategists are also increasingly concerned about tax-related risks in the US. Against this backdrop, Goldman Sachs currency strategists are closely monitoring potential changes in American tax legislation.
These changes are buried deep within a tax and spending bill being pushed through Congress by Donald Trump. The proposed legislation includes higher taxes on passive income, such as interest and dividends earned by investors holding trillions of dollars in US assets.
“Even if the law is applied selectively, the investment risk in the US will persist. Investors are already reevaluating asset correlations, viewing it as a reason to diversify and reduce exposure to US holdings,” Goldman Sachs noted.
Previously, analysts at Goldman Sachs said that the dollar was overvalued by 15%. In their view, further depreciation of the greenback will be driven by global asset redistribution and repricing.
