Bank of America warned that the US dollar could be in a difficult summer, since it has already fallen abruptly this year.
The dollar index, which tracks the value of the US dollar compared to the main currencies, has fallen almost 9% to 99.74 this year, since the tariff war of President Donald Trump triggered a change of US assets.
Bank of America Continuous Civiling Data During the summer. The weakness in the US dollar is widely seen as positive for assets called dollars, such as gold and bitcoin.
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The FX world research team led by Atanasios Vamvakidis declared in a report to customers on Friday that tariffs are more harmful to the economy of the United States as the country trades more with the rest of the world than perhaps any other nation.
The report recognized the recent resilience in the economy of the United States and the developments to support growth, such as the tax cuts of President Donald Trump and the abandonment of extreme fiscal expenses cuts, but declared that “the negatives dominate.”
“Political uncertainty on multiple fronts remains. Companies can stop hiring and investment plans until there is greater clarity. In most scenarios, we see that tariffs much higher than the starting point, the current levels being the minimum levels,” the report said.
He added that the market is negatively reacting to the loosening of fiscal policy at a time when debt levels are in maximum record, which leads to higher indebtedness costs. Meanwhile, the Federal Reserve cannot take significant measures due to the increase in inflation expectations.
“Migration flows have collapsed. Demand increased in the first quarter [front running] Before tariffs, but they may be about to fall, “said strategists, pointing out the weakness in high frequency indicators, such as ISM data and the weekly economic index of Dallas Fed.
The weekly economic index of Dallas Fed has resumed the bearish trend after the brief increase in early April and reached the lowest since December, according to Data Source TradingView.
“Such high frequency indicators tend to be very noisy, but they could still point to a slowdown in the economy in the coming months,” the strategists said.
