Bitcoin 
Ethereum 
Tether 
BNB 
XRP 
USDC 
Solana 
TRON 
Lido Staked Ether 
Figure Heloc 
Westpac says global growth rotation may weigh on the dollar.Summary:Westpac sees dollar drifting lower, with risks skewed to the downside.US growth expected above trend in 2026, driven by consumers and tech investment.Inflation pressures likely to persist, limiting Fed rate cuts to one more move.Euro and sterling forecast to outperform, reaching $1.22 and $1.41 by mid-2027.Asia currencies also seen strengthening, led by gradual renminbi gains.Westpac says the US dollar is likely to edge lower over the next 12 to 18 months, even though the bank remains constructive on the US economic outlook.The dollar rallied from 97.9 in late December to 99.4 in mid-January before reversing sharply to a near four-year low of 96.2. It is currently trading around 97.0 — roughly 15% below its mid-2022 peak and about 1.5% beneath its 10-year average. Westpac’s baseline view is that the dollar will settle somewhere between current levels and its 20-year average, but risks are skewed to the downside.Importantly, Westpac is not bearish on the US economy. The bank expects another year of above-trend growth in 2026, led by resilient consumer spending and continued investment in technology infrastructure. It anticipates the labour market will remain effectively fully employed, with wage growth continuing to outpace inflation.However, Westpac argues that inflation risks remain elevated. Capacity constraints across housing, transport, energy and healthcare, alongside the lagged effects of tariffs, are likely to keep price pressures above the Federal Reserve’s 2% target. This underpins its expectation for only one additional rate cut from the Federal Open Market Committee, a more cautious stance than current market pricing for at least two cuts this year.So why the softer dollar outlook? Westpac points to improving opportunities elsewhere. It argues that the strong run in US equities may limit further relative outperformance, while growth narratives in Europe and Asia are increasingly focused on structural expansion rather than trade risks.The bank expects the euro to rise toward $1.22 and sterling toward $1.41 by mid-2027. It sees more gradual gains for the Canadian dollar and yen, and anticipates further appreciation in the renminbi as Asia’s growth prospects strengthen. USD/CAD projected to ease to 1.34 by mid-2027 and 1.30 by mid-2028USD/JPY 145 by end-2026 and 139 by mid-2028 USD/CNY seen advancing toward 6.35 over the next two years
This article was written by Eamonn Sheridan at investinglive.com.
💡 DMK Insight
Westpac’s outlook on the dollar suggests a bearish trend ahead, and here’s why that matters: With expectations of US growth remaining above trend into 2026, driven by consumer spending and tech investments, the dollar could face downward pressure. This scenario is compounded by persistent inflation, which limits the Federal Reserve’s ability to cut rates aggressively. Traders should consider how this environment might impact their positions, especially if the euro and sterling are forecasted to outperform. If the dollar weakens, assets like commodities and emerging market currencies could see a boost. Watch for key technical levels on the dollar index; a break below recent support could trigger further selling. On the flip side, if inflation pressures ease unexpectedly, the Fed might pivot more dovishly, which could provide a short-term lift to the dollar. Keep an eye on inflation data and Fed communications for any shifts in sentiment. The immediate focus should be on the dollar’s performance against the euro and sterling, as these currencies are expected to gain ground. Traders should monitor the dollar index closely, especially if it approaches critical support levels in the coming weeks.
📮 Takeaway
Watch the dollar index closely; a break below key support could signal further declines, especially against the euro and sterling.
