Archive · 25 Nov 2025
JPMorgan Forecasts Weaker Dollar in 2026 Amid Fed Risks
JPMorgan, a big bank, thinks the US dollar will get weaker in 2026.
They say this will happen because the Federal Reserve (the group that controls interest rates) might cut rates, and the government might spend more money and cut taxes.
But they also warn that if the US economy gets better, with more jobs and growth, people might think the Fed will raise rates instead, which could make the dollar stronger.
So, while they mostly think the dollar will weaken, they're not completely sure because other things could happen.
JPMorgan forecasts the US dollar to weaken by 3% by mid-2026 due to anticipated Fed rate cuts and easier fiscal policy.
The forecast is based on factors like government spending, tax cuts, and fears of administration interference in Fed decisions.
Potential challenges include higher US interest rates and a possible rebound in the US jobs market or growth expectations.
JPMorgan's economics team expects about 50 basis points of Fed hikes into the first half of 2027.
Nearly two-thirds of US treasurers and CFOs surveyed expect the Fed to hike rates next year, contrasting with JPMorgan's forecast.
- Who
- JPMorgan Chase & Co. strategists, led by Meera Chandan and Arindam Sandilya
- What
- Forecast of a weaker dollar in 2026 with potential challenges from Fed hike risks
- When
- Forecast published on November 25, with expectations extending to mid-2026 and beyond
- Where
- Global currency markets, with specific focus on the US dollar
- Why
- Anticipated Fed rate cuts, government spending, tax cuts, and fears of Fed interference underpin the forecast, but higher US interest rates and potential job market rebound pose challenges
- Organization
- JPMorgan Chase & Co.
- Forecast
- Dollar to fall 3% by mid-2026
- Key Strategists
- Meera Chandan, Arindam Sandilya
- Factors Influencing Forecast
- Fed rate cuts, government spending, tax cuts, Fed interference fears
- Potential Challenges
- Higher US interest rates, rebound in US jobs market, growth expectations
- Fed Hike Expectations
- 50 basis points of hikes into first half of 2027
- Market Participants' Views
- Nearly two-thirds of US treasurers and CFOs expect Fed hikes next year