Deutsche Bank analyst warns dollar to weaken further

Group 1: Dollar Outlook - The United States dollar is expected to face challenges in 2026, continuing its decline from 2025, as indicated by Deutsche Bank's George Saravelos [1] - The dollar's previous strength was linked to its status as the highest-yielding developed market currency, a position it has lost due to the Federal Reserve's rate-cutting cycle [1] - The full-year drop in the dollar in 2025 was the second largest since the free-floating exchange rate began after Bretton Woods, making it difficult to replicate such a decline in 2026 [2] Group 2: Global Economic Conditions - Other central banks, such as those in Australia and Norway, are now offering higher yields, which diminishes the dollar's advantages [2] - Global growth has become more balanced, with Europe and Japan increasing fiscal stimulus, contributing to a less favorable environment for the dollar [2] - The dollar is expected to weaken at a slower pace than in the previous year due to a large external deficit reliant on inflows [3] Group 3: Crypto Adoption - A report from Bitwise Asset Management and VettaFi indicates record levels of crypto adoption among financial advisors, with 32% allocating client funds to crypto in 2025, up from 22% in 2024 [4] - Key catalysts for this increase include growing regulatory progress, institutional demand, and new all-time highs for Bitcoin [5] - The findings suggest an accelerating integration of digital assets into traditional finance [5]