UBS cancels its previous forecast for dollar growth and expects U.S. currency to weaken in 2025

In light of recent events, UBS experts revised their January forecast for dollar growth in 2025 downward. Their decision is attributed to increased recession risks in the U.S., unexpected fiscal changes in Europe following Friedrich Merz's victory in German elections, and a severe trade standoff between the United States and Canada.

Due to these factors, a group of UBS experts predicts the global reserve currency to weaken this year, while the euro and the yen are expected to strengthen. The analysts considered such a scenario before Donald Trump won the presidential election.

However, the increased volatility in the currency market — triggered by the U.S. imposing import tariffs against several countries, followed by the cancellation and revision of these duties — has led experts to doubt the dollar's strong growth prospects. The factors, which UBS initially considered to be positive for the U.S. currency, are now raising concerns among the experts.

The efforts of the European authorities, on the contrary, began to support the euro and the region's economy. As a result, the Swiss bank raised its forecast for the EU currency up to 1.12 against the dollar by the end of the year.