BofA remains skeptical about the US dollar's medium-term growth prospects. However, the bank sees a chance for temporary gains of the currency in summer. The report highlights signals pointing to a potential trend reversal.
New York Fed President John Williams states it is still too soon to consider cutting interest rates, citing growing inflationary pressures from US import tariffs. Williams notes that President Trump’s trade policies currently have a modest impact on economic data.
According to the latest release of the Federal Reserve’s Beige Book, business sentiment in the US remained neutral to slightly pessimistic. American companies noted that stricter immigration policies under President Donald Trump have added pressure to an already challenging environment.
In June, US industrial production showed an increase of 0.3% for the first time in four months. This was supported by higher output in utilities (+2.8%) and modest growth in manufacturing (+0.1%).
An increase of the indicator value may contribute to the rise in quotes of USD.
An increase of the indicator value may contribute to the rise in quotes of USD.
A decrease of the indicator value may contribute to the fall in quotes of USD.
For most of 2025, the greenback was in a downtrend, but BofA Securities has seen signs of a reversal. On Wednesday, the Dollar Index rose to 98.5 against major currencies. Still, it has fallen almost 10% so far this year.
In June, US inflation rose due to higher prices for imported goods, including coffee, furniture, and appliances. The accelerated price growth led investors to lower expectations regarding interest rate cuts by the Federal Reserve.
Core inflation in the US grew less than forecast in June, marking the fifth consecutive month of slower-than-expected growth despite the impact of President Donald Trump’s import tariffs, which pushed up prices on certain goods.
According to Federal Reserve Bank of Dallas President Laurie Logan, US central bank officials will likely have to keep interest rates steady for a while to ease inflationary pressures.
The dollar is the monetary unit of the United States (US). It is also used as the official currency by some other countries (Ecuador, Zimbabwe, El Salvador). The dollar holds a leading position in the world economy.
At the moment, the dollar dominates the system of international settlements with almost 50% share (the euro ranks second with less than 25%). Meanwhile, the dollar's dominance is even more pronounced in the financial sector, on the foreign exchange market, and in the government reserves.
The US currency (USD) quotes, as well as those of its foreign counterparts, depend primarily on the economic and political situation in the issuing country. The US authorities, such as the Federal Reserve System (the Fed) and the Department of the Treasury, influence the dollar exchange rate by changing their monetary, fiscal, budget, and tax policies.
Moreover, the value of the dollar may be significantly affected by the latest news and the international situation. Global economic problems and rising geopolitical tensions have historically been favorable for the US currency, as investors consider it one of the major safe-haven assets, along with gold. In contrast, during periods of strong economic growth and a relatively calm global environment, the demand for the dollar tend to reduce.
